Report No. 21306-DR Dominican Republic Poverty Assessment Poverty in a High-Growth Economy (1986-2000) (In Two Volumes) Volume 11: Background Papers December 17, 2001 Poverty Reduction and Economic Management Unit Latin America and the Caribbean Document of the World Bank Dominican Republic Currency Equivalents (Exchange Rate Effective December 31, 2000) Currency Unit = Dominican Peso US$1 = DR$16.53 Government Fiscal Year January I - December 31 Weights and Measures Metric System Abbreviations and Acronyms BARD Banco Agricola de [a Rep6blica Dominicana CAS Country Assistance Strategy CAASD State-owned utility in Santo Domingo (provides water and sanitation services) CB Central Bank CDE National Electricity Corporation CDF Country Development Framework CEA State Sugar Council CESDEM Centro de Estudios Sociales y Demograficos CIANI Centros Infantiles de Atenci6n Integral COAAROM State-owned utility in La Romana (provides water and sanitation services) CONANI Consejo Nacional para la Nifiez CONAU Consejo Nacional de Asuntos Urbanos CORAAMOCA State-owned utility in Moca (provides water and sanitation services) CORAASAN State-owned utility in Santiago (provides water and sanitation services) CREP Comisi6n de Reforma de la Empresa Pfblica DASA Despradel y Asociados DIAPE Direcci6n de Informaci6n, Andlisis y Programaci6n Estrat6gica de la Presidencia DN National District ECD Early Childhood Development ENDESA Encuesta Demogrdfica y de Salud ENGIH Encuesta Nacional de Gastos e Ingresos de los Hogares FEyD Fundaci6n Economia y Desarrollo FTZ Free Trade Zones GDP Gross Domestic Product GNP Gross National Product ICRISAT International Crops Research Institute for the Semi-Arid Tropics IDB Inter-American Development Bank IDDI Dominican Institute of Integral Development IDSS Dominican Social Security Institute IEPD Instituto de Estudios de Poblaci6n y Desarrollo ILO International Labor Organization IMF International Monetary Fund INAPA Instituto Nacional de Agua Potable y Alcantarillado INESPRE National Institute for Price Stabilization INVI Instituto Nacional de Vivienda JAD Junta Agroempresarial Dominicana LAC Latin America and the Caribbean LSMS Living Standards Measurement Survey MECOVI Programa para el Mejoramiento de las Encuestas y la Medici6n de las Condiciones de Vida en Antrica Latina y el Caribe NGO Non-Government Organization OMSA Oficina Metropolitana de Servicios Autobuses ONAPLAN National Planning Office ONAPRES National Budget Office ONE National Statistical Office PUCMM Pontificia Universidad Cat6lica Madre y Maestra PNMRE National State Modernization and Reform Program PNUD United Nations Development Program PROALTO Program "Alimentos para Todos" PROMESE Programa de Medicamentos Esenciales SEEC Secretaria de Estado de Educaci6n SESPAS Secretariat of Public Health and Social Assistance SBI Banking Sector Superintendent WTO World Trade Organization Vice President: David de Ferranti Country Director: Orsalia Kalantzopoulos Sector Director: Ernesto May Task Manager: Philippe Auffiret PREFACE This report is the outcome of a collaborative process by the Government of the Dominican Republic and the World. Bank. The process involved continuous cooperation and several missions by World Bank staff and consultants to the DR. A first draft of the report was delivered to the Dominican authorities in February 2001. Several rounds of discussions were held during the rest of 2001. As a consequence, the report does not incorporate the economic developments that took place after February 2001. The report is available on the World Bank's website www.worldbank.org. The Poverty Assessment was written by Philippe Auffret with inputs from Ms. Jacqueline Mora-BAez, and based on the background work prepared over a one year period by a team comprising Mr. Tarsicio Castafleda (Social Policies); Mr. Soumya Chattopadhyay, Ms. Marianne Fay, Mr. Jos6 Luis Guasch, and Ms. Rosanna Nitti (Urban Slums); Mr. Ram6n L6pez (Rural Poverty); Ms. Rita Mena (Institutions); Ms. Jacqueline Mora-BAez (Determinants of Poverty); Mr. Maurice Schiff (Macroeconomics and Rural Poverty); Mr. Marco Scuriatti (Haitian Migration); and Mr. Edgar Victoria Yeb (Social Policies). Social Assessments were prepared for this report by Padre Pedro Ruquoy of the Centro Puente; Mr. David Luther and Mr. Ram6n Seiffe (among others) of the Instituto Dominicano de Desarrollo Integral, Inc. (IDDI); and Padre Hip6lito Cabral of the Parroquia San Juan Bautista, Arquidi6cesis de Santo Domingo. Mr. John Panzer and Mr. Norbert Schady were peer reviewers. Ms. Stephanie Larson supplied additional inputs and edited the report. Ms. Pilar Hach6 translated Volume I into Spanish. Ms. Aline Brito, Ms. Judith Santiago and Ms. Maria Ivanova Reyes also assisted in the preparation of the report. The report also benefited from comments from Mr. Philip Young and Mr. Alessandro Giustiniani (IMF), and colleagues in LAC, including Ms. Ana-Maria Arriagada, Ms. Maria Correia, Ms. Frangoise Delannoy, Ms. Maria Donoso Clark, Mr. William Experton, Mr. Marco Mantovanelli, Ms. Pia Peeters, Mr. Thakoor Persaud, Mr. Guillermo Perry, Mr. Alberto Rodriguez, Ms. Susana SAnchez, Mr. Hermann von Gersdorff, and Mr. Quentin Wodon. Mr. Ali Khadr, Lead Economist during the preparation of the report, and Mr. Norman Hicks, Poverty Reduction Sector Manager, provided much support and guidance throughout the process. The Poverty Assessment contains a significant amount of original research for which we are indebted to Mr. H6ctor MI. Valdez Albizu, former Governor of the Central Bank, entity which kindly made the 1998 ENGIH available to us. In addition, the 1986 and 1992 surveys were graciously provided by the Fundaci6n Economia y Desarrollo (FEyD). I The report also benefited from discussions with Dominican counterparts. We want to thank Padre Hip6lito Cabral for having arranged our stay in La Zurza, where we were provided with first-hand accounts of urban poverty through extensive discussions with Ana Luisa, Fabio, Jesils, Ram6n and their families, among others. Comments on preliminary versions of the report were provided by the working group on poverty (part of the Comprehensive Development Framework) headed by Ms. Ramonina Brea (PUCMM), and also provided in the course of several presentations, including one to Vice-President Milagros Ortiz-Bosch (also Secretary of Education) and the Seminar on Rural Poverty, organized by the Instituto Interamericano de Desarrollo Social (INDES), the Inter-American Bank and the Instituto Tecnol6gico de Santo Domingo (INTEC). Invaluable comments were also provided by Padre Jose Luis Alemdn and Ms. Ramonina Brea (PUCMM); Ms. Tonia Marek (IDB); members of the Central Bank, including: Ms. Mercedes Carrasco, Ms. Dilia Cruz de Sanchez, Ms. Dolores Escobar, Mr. Julio Estrella, Mr. Luis Nuflez, Ms. Ana Beatriz Rodriguez, Mr. Luis Reyes Abreu, and Mr. Luis Reyes Santos; members of the National Planning Office (ONAPLAN), including: Mr. Fernando Mangual, Mr. Antonio Morillo, and Mr. Ranulfo Rodriguez, as well as Rafael Calder6n (Technical Secretary of the Presidency); Mr. Pelegrin Castillo (Deputy - National Congress); Mr. Fernando DurAn (Executive Director of DIAPE, Presidencia de la Rep4blica); Mr. Carlos Despradel (DASA, Economic and Financial Consultants); Ms. Mariel Fiat (Health Sector Reform); Mr. Hugo Guiliani Cury (Consejo Asesor del Presidente de la Reptblica); Mr. Josd Lois Malkum (Executive Coordinator of the Executive Commission for Health Sector Reform); and Mr. Manuel Vargas Payano (Director of the Plan Presidencial de Lucha contra la Pobreza). We want to thank Monseffor Agripino Nftez Collado (Rector of PUCIM), Mr. Radhames Mejia (Vice- Rector of PUCMM) and Ms. Ramonina Brea (Director of CUEPS-PUCMM) for their invaluable support in the publication and dissemination of this report. Lastly, we want to address special thanks to Mr. Frank Guerrero Prats (Governor of the Central Bank), Mr. Rafael Calder6n (Technical Secretary of the Presidency) and Mr. Jaime Alvarez (Adviser to the Executive Director), who made the publication of the Poverty Report possible. ii TABLE OF CONTENTS Background Papers Table of Contents iii Section 1: Measure and Evolution of Poverty (1986-1998) 1 by Philippe Auffret A. Introduction 1 B. The Limitations of Poverty Rates as Policy Goals 2 C. Methodology 5 C.1. Definition of Poverty Lines 5 C.2. Definition of Welfare 8 C.2.i. Revenues 8 C.3. Poverty Estimates and Standard Errors 11 Annex 1: Poverty Measures: Measurement Issues 13 Section 2: Causes of Poverty Reduction in the Dominican Republic: Growth and Income Distribution 15 by Jacqueline Mora-Bdez A. Introduction 15 B. Methodology 15 C. Some Results 19 C. 1. The Leading Role of Growth in Poverty Alleviation in the DR 19 C.2. Comparison across Regions and Household Head Education 20 C.3. Growth Elasticity of Poverty 22 D. Some Simulations 23 Section 3: The Anatomy of a Slum - the Ozama Barrios in Santo Domingo 25 by Marianne Fay, J. Luis Guasch, Rosanna Nitti and Soumya Chattopadhyay A. Introduction 25 B. The Anatomy of the Ozama Barrios 26 B.1. History 26 B.2. Characteristics of Households 26 B.3. Integration in the City 27 B.4. Employment 27 B.5. Income and Expenditures 27 B.6. Housing 28 B.7. Household Location and Segmentation 29 B.8. Flooding and Location of Households 30 B.9. Health 31 C. Infrastructure Services 31 C.1. Electricity 31 C.2. Water 34 C.3. Sanitation 35 C.4. Solid Waste 36 C.5. Contamination 36 C.6. Violence and Social Problems 37 iii C.7. Community Organization 38 D. Conclusion 38 Section 4: Rural Poverty in the Dominican Republic: Market Failures, Government Failures and New Policies 41 by Ramdn L6pez A. Introduction 41 B. Conceptual Framework 42 C. Rural Poverty and Sources of Income for the Poor: an Overview 43 D. Assets of the Poor and Asset Productivity 44 E. Government Intervention and Market Failures 48 E. 1. Land Reform 48 E.2. Land and Other Assets: Titling Policies 49 E.3. Rural Credit Policies 50 E.4. Privatization of the Sugar Industry 51 E.5. Other Public Interventions in Agriculture 52 E.6. Investments in Education 53 F. Policies 54 F. 1. Specific Policy Recommendations 55 Annex 1: Regression Tables 58 Section 5: The Effects of Macroeconomic Policies on Rural Poverty in the Dominican Republic 61 by Maurice Schiff A. Introduction 61 B. Agriculture and Rural Poverty 62 C. Effects of Macroeconomic and Trade Policies 64 C. I. Macroeconomic Policies 64 C.2. Trade Policy 68 C.2.i. General Trade Reforms 68 C.2.ii. Agricultural Trade Reforms 69 C.2.iii.FTAs 70 D. Haitian Immigration 72 E. Investing in the Poor 74 F. Hispaniola 76 G. Policy Recommendations 77 Section 6: A Review of the Haitian Immigrant Population in the Dominican Republic 81 by Marco Scuriatti A. Presence, Status and Socioeconomic Conditions of Haitians and Dominicans of Haitian Descent in the Dominican Republic 81 B. Push and Pull Factors behind the Haitian Migration to the DR 85 C. Policies Implemented by Dominican Authorities and the Role of NGOs in Resolving the Haitian Immigration Issue 88 D. Conclusions and Recommendations 89 Section 7: Managing Social Risks in the Dominican Republic 95 by Tarsicio Castaleda and Edgar A. Victoria Yeb A. Executive Summary 95 B. Introduction 98 iv C. An Overview of Social Indicators and Social Spending in the Dominican Republic in the Latin American Context 101 C.I. Social Indicators 101 C.2. The Size of Social Spending in the Dominican Republic 102 C.3. Inadequate Composition of Social Spending 103 C.4. Inequity of Social Spending 104 C.5. Conclusion 105 D. Conceptual Framework 106 D.1. Addressing Key At-Risk Groups 111 E. Analysis of Existing Safety Net Programs in the Dominican Republic 111 E.1. Ages 0-5: Early Childhood Development 111 E.2. Ages 6-13: Primary Education 114 E.3. Ages 14-24: Secondary and Higher Education 115 E.4. Ages 25-64: Employment 118 E.5. General Population Risks 124 E.6. Summary of Risks and Possible Social Protection Strategies 127 E.7. How to Design and Implement the Social Protection Strategy 130 Annex 1: Programas Sociales en la Repfiblica Dominicana, 1999 135 Section 8: Institutional Aspects of Social Programs 143 by Rita Mena A. Introduction 143 B. Ages 0-5: Early Child Development 143 B. 1. CONANI/Centros Infantiles de Atencidn Integral (CIANI) 144 B.2. SESPAS/Direcci6n General de Protecci6n al Menor/Public Day-Care for Children 145 B.3. SEEC/Initial Education 146 B.4. Institutional Strategy for this Age Group 147 C. Ages 6-13: Basic Education 149 C. 1. CONANI/Ayfidame a Ser Niho Program (PASN) 149 C.2. SEEC 150 C.2.i. Basic Education 150 C.2.ii. Scholarships for Children to Study in Private Schools 151 C.2.iii. Scholarships for Teachers 151 C.2.iv. Instituto de Bienestar Estudiantil/Desayuno Escolar Program 152 C.2.v. Urbano Marginal Program 152 C.2.vi. Fronterizo Program 153 C.2.vii.Transferencia de Fondos Program 153 C.3. Institutional Strategy for this Age Group 153 D. Ages 14-24: Secondary and Higher Education 154 D. 1. Presidencia de la Repziblica/Direccidn General de Promoci6n de la Juventud 154 D.1.i. Programa Nacional de Becas 154 D.1.ii. Program of Housing for Students/Pension Homes (casa-pensi6n) 154 D.2. SEEC 155 D.2.i. Secondary Education 155 D.2.ii. Technical-Professional Education 156 D.2.iii. Basic Education for Adults 156 D.2.iv. SET/Quisqueya Joven Program 157 D.3. Institutional Strategy for this Age Group 157 E. Ages 25-64: Employment 158 V E. 1. Employment 25-64 158 E.I.i. Secretaria de la Mujer/Programa de Cooperativas de Producci6n para Mujeres 158 E. 1 .ii. DGPJ/Production and Employment for Youngsters 158 E. 1.iii.SET/Bolsas de Empleo Program 159 E.2. Institutional Strategy for this Age Group 159 F. Ages over 65 159 F. 1. Pension System 159 F.1.i. IDSS 159 F.1.ii. FJPEP 160 F. 1.iii. ISSFAPOL 161 F.1.iv. Other Laws 161 F. 1.v. Private Pension Funds 161 F.l.vi. Some Final Issues and Comments 161 G. Programs Oriented to the General Population 162 G. 1. Food Assistance 162 G. 1.i. Presidency of the Republic 163 G.1.ii. INESPRE/PROALTO 165 G. 1.iii.Final Comments and Options for Food Assistance Programs 165 G.2. Housing 166 G.2.i. INVI 166 G.2.ii. Programa ComunidadDigna 168 G.2.iii.Oficina Supervisora de Obras del Estado 168 G.2.iv. Some Final Comments and Options for this Sector 168 G.3. Water and Sanitation 169 G.3.i. Pro-Comunidad 169 G.3.ii. Final Comments 169 G.4. Health 169 G.4.i. SESPAS 169 G.4.ii. Presidency/PROMESE: Programs of Basic Medications 170 vi Measure and Evolution of Poverty (1986-1998) Philippe Auffret ' 1. This paper analyzes the evolution of poverty in the Dominican Republic (DR) between 1986 and 1998.2 A. Introduction 2. Poverty assessments in the DR have been carried out irregularly, often by private institutions, in an isolated and ad-hoc fashion (Table 1). The National Statistical Office (ONE) is the public entity officially in charge of conducting surveys and monitoring most economic indicators. However, the absence of adequate resources and a clear mandate to monitor poverty have led the ONE to conduct only two household surveys limited to the city of Santo Domingo in 1941 and 1969 in conjunction with the Central Bank. Faced with a lack of systematic recollection of information by the ONE, the Central Bank and private institutions have taken a more active role in measuring welfare in the DR. The Central Bank has implemented three household surveys in 1977, 1984 and 1998. The most recent Tercera Encuesta Nacional de Gastos e Ingresos de los Hogares (ENGIH 1998) represents by far the most complete household survey available to date. Private institutions have also carried out several household surveys which have been used to assess welfare in the DR. In 1986, Tufts University conducted an Income-Consumption Household Survey (Encuesta Nacional de Ingreso- Consumo). In 1989, the Central Bank conducted a household survey with the objective of assessing social expenditures, financed by the UNDP. In 1992, a non-profit Dominican economics research institute, the Fundacion Economia y Desarrollo (FEyD) developed an Income and Expenditure Survey (Encuesta de Ingresos y Gastos), financed by USAID. Also, the Institute for Population and Development Studies (IEPD) (Instituto de Estudios de Poblacion y Desarrollo) and the Center for Social and Demographic Studies (CESDEM) (Centro de Estudios Sociales y Demograficos) conducted demographic and health surveys (Encuesta Demografica y de Salud) in 1991 (ENDESA- 91) and 1996 (ENDESA-96), respectively. Of these two surveys, the ENDESA-96 includes an income module and has been used to assess welfare. In addition, the assessments of welfare have not been designed to feed into the policy formulation process, and monitoring and policy follow-up is weak. 1I want to thank Edgar Victoria Yeb who has provided valuable research assistance. 2 Approximately 500,000 Haitian-Dominicans are not included in the analysis since they remain largely unaccounted for in the household surveys. 1 Table 1: Surveys Used to Assess Poverty in the Dominican Republic Year Institution Survey Coverage 1941 National Statistical Office (ONE) Encuesta de Hogares Santo Domingo 1969 Central Bank (CB) and ONE Encuesta de Ingresos y Gaslos Familiares Santo Domingo 1976-77 CB Primera Encuesta Nacional de Ingresos y National Gastos de las Famiias (ENIGF 1977) 1984 CB Segunda Encuesta Nacional de Ingresos y National Nov Gastos de las Familias (ENIGF 1984) (1,566 households) 1986 Tufts University Encuesta Nacional de Ingreso-Consumo National Jan-Nov (1,404 households) 1989 CB Encuesta de Gastos Sociales National March (799 households) 1991 Instituto de Estudios de Poblacion y Encuesta Demografica y de Salud National July-Nov Desarrollo (IEPD) (ENDESA 91) (7,144 households) 1992 Fundacion Economia y Desarrollo Encuesta Nacional de Ingresos y Gastos National July-Aug (FEyD) (1,198 households) 1993 ONE Censo de Poblacion y Vivienda National (all households) 1996 Centro de Estudios Sociales y Encuesta Demografica y de Salud National Sept-Dec Demograficos (CESDEM) (ENDESA 96) (8,831 households) 1998 CB Tercera Encuesta Nacional de Gastos e National Oct 97-Sept 98 Ingresos de los Hogares (ENGIH 1998) (4,810 households) 3. The annex contains a description of how we used the 1986 Tufts University survey, the 1992 FEyD survey and the 1998 ENGIH survey to compare poverty and welfare changes of the Dominican population between 1986 and 1998. Differences across surveys make it a challenging task. Working with household survey data requires many, often-cumbersome steps to gather data and verify consistency before the actual empirical investigations can begin. The difficulty is even greater when one wants to compare artificially created variables (normative food and consumption baskets) across surveys. For poverty analysis, these variables are central to first derive poverty lines and then compare poverty indicators over both time and space. We start with a short background section on poverty comparison that stresses the importance of defining welfare in a consistent manner when conducting comparisons over time. We then describe how we aggregate expenditures from the 1992 and 1998 surveys (expenditures are not available from the 1986 survey), paying particular attention to the comparability between these two surveys. Then, we turn to the same issues on the revenue side (the four surveys include data on revenues). We next explain how we derive poverty and extreme poverty lines for 1992 and how we construct comparable poverty lines for 1986 and 1998. Finally, we derive poverty measures using data from the four surveys. The ultimate objective of the annex is to assess the impact of the remarkable economic growth that has prevailed since 1992 on the poorest segments of the population. B. The Limitations of Poverty Rates as Policy Goals 4. Differences in methodologies (including the definition of poverty lines) and questionnaires have made comparisons across surveys and across time a very challenging task. Despite this fact, the public debate, which is political by nature, has often assumed poverty levels to be comparable and has essentially focused on levels and evolution of poverty rates. Table 2 indicates the poverty rate and extreme poverty rates derived from the analysis of the surveys. 5. Although setting poverty reduction goals based on poverty indicators is important and commendable, policy makers need to be aware of the often quite fragile nature of such poverty estimates (Box 1). First, poverty is multidimensional and has a much broader meaning than that which can be derived from the conventional poverty indicators based on income or consumption. Income and consumption are only means of attaining better lives, and not ends in themselves. Lower 2 malnutrition in children, better health of the population, more safety, longer lives, lower maternal and infant mortality rates, higher literacy, less hunger, less discrimination in work and social life, and more active participation in the political and social affairs of communities and the country characterize better and less poor societies. Several other dimensions might not be linked to measures of income- and consumption-based poverty: crime and violence might affect large parts of the population, discrimination in the job market can exist against certain groups in society, or children might be malnourished even though they grow up in rather affluent households. Table 2: Previous Studies of Poverty in the Dominican Republic, 1984-2000 Poverty Rate by Survey (Extreme Poverty Rate appears in p rentheses) Unit of Survey Method 1984 1986 1989 1991 1992 1993 1996 1998 Source Analysis Used for the Analysis 1. NATIONAL Del Rosario, G. Household" 1984 CB Poverty line 60.0 (1993) (20.0) Swindale, A. Population" 1986 Tufts University Poverty line 33.3 (1986) _Toushold'_ (17.3) Psacharopoulos Household 1989 GB Poverty line 24.1 (1989) Central Bank Population" 1989 CB Poverty line 29.8 (1989) 1 (20.2) Gamez, S. Household" 1984 CB Poverty line 39.2 51.7 (1993) (11.8) (24.5) __________________1989 GB _______ Dauhajre, et al. Population 1986 Tufts University. Poverty line 18.3 24.5 20.6 (1994) 1989 CB (10.5) (13.7) (9.0) 1992 FEyD ONAPLAN Household 1991 ENDESA Multivariate 54.8 59.6 55.7 51.8 1993 National Census Analysis (19.7) (19.8) (18.5) (14.6) 1996 ENDESA 1998 CB Central Bank Household 1998 CB Poverty line 31.7 21.5 (1999) World Bank Population 1986 Tufts University Poverty Line 37.5 33.9 28.6 (2001) 1992 FEyD (8.8) (7.3) (5.1) 1998 CB Urban Del Rosario, G. 56.0 (11.0) Swindale, A. 23.7 ____ (11.0) _ _ Central Bank 27.8 (18.5) Gamez, S. Same as National 27.4 49.1 (5.2) (23.1) Dauhajre, et al 11.7 23.3 10.9 (7.1) (12.7) (5.0) Central Bank 19.5 15.1 (1999) World Bank 28.5 19.3 20.5 (2001) (6.1) (4.1) (2.7) RURAL Del Rosario, G. 64.0 (29.0) Swindale, A. 43.5 (24.3) Central Bank 33.9 (20.1) Gamez, S. Same as National 51.6 58.6 (18.7) (28.3) Dauhajre, et al 24.5 27.4 29.8 (14.1) (16.3) (12.3) Central Bank 44.9 32.6 (1999) World Bank 47.3 49.0 42.1 (2001) (11.6) (10.6) (9.0) No adjustment factors were used. Adjustment factor = 1.379. Adjustment factors of 1.5152 and 1.158 in 1986 and 1989 respectively. Adjustment factors of 1.08 in 1992 and 1.00 in 1998. 3 6. Second, the determination of poverty rates based on income or consumption levels depend on assumptions which have a certain degree of arbitrariness and can therefore be called into question. The determination of consumption and income and the choice of poverty lines depend on numerous assumptions, which, if changed only slightly, can produce very different poverty rates. For example, measures of consumption or income do not carry any information about the goods that are offered. An increase in real income merely reflects a widening in command over marketed goods and services. Also, poverty lines based on nutrient intake assume that households know about nutrition and balanced diets, which may also be questionable. Box 1: Poverty Measures: Conceptual Issues The notion of the poverty line is at the heart of all discourse on poverty. Poverty lines are a critical threshold of consumption, income or more generally access to goods and services below which individuals are declared to be poor. The poverty line then represents a minimum level of "acceptable" economic participation in a given society at a given point in time. For instance, poverty lines can be defined on minimum nutrient levels that make up an adequate diet expanded for the costs of other requirements such as rent and clothing. This is the approach we followed in this report. Alternatively, poverty lines can be defined as the prevailing legally decreed minimum wage in a country or some norms, say, 60 percent, of the mean income of a country. There are however, some fundamental concerns that surround poverty measurement. First, should we declare a person to be poor when his actual, observed consumption basket falls below certain pre specified thresholds or when his expenditure (or overall income) falls below the minimum required to obtain these consumption standards? For example, nutrition levels may not ambiguously rise with income and canned food may become quite popular at certain levels of income, even though their nutritive value is questionable. The elasticity of food consumption with respect to income may not correspond to the nutrient elasticity. Indeed, income represents the capacity to consume but not consumption itself. Second, although there is something absolute about the notion of poverty (in all societies people need adequate levels of food, clothing and shelter), there are variations in what might be considered "adequate". Access to higher levels of education or alcoholic beverages may be deemed a "basic need" in some societies while they may not be in others. Third, poverty is a transient measure and people do often experience significant fluctuations in their income and consumption. Measures of "structural" or chronic poverty must be therefore complemented by a study of "temporary" poverty. The distinction between the two types of poverty is very important, as the policies to combat temporary (as opposed to chronic) poverty may be very different. For this reason, expenditures are often thought to be a more reliable way to assess chronic poverty because income fluctuates more across time. An International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) study in India found that only about 12 percent of households were never poor during the nine years under consideration while, at the other extreme, 44 percent were poor for six or more years, and 19 percent were poor in every year. The surveys currently available in the DR do not allow for checking this proposition, as they do not follow the same household for various years. The survey expected to be conducted by the Central Bank in the future may provide this opportunity. Fourth, poverty measures fail to account for intra-household allocation of expenditures. Most surveys provide household-level data. However, this does not recognize that the allocation of expenditures within the household is often significantly skewed. Among potential victims are the women and the elderly. There is some evidence that such discrimination grows sharply with the overall destitution of the household. Also, a second set of concerns arise from the fact that larger households typically have more children. Some correction for the presence of children is desirable, because they consume less than adults. The construction of adult equivalence scales - conversion factors that express the consumption of children as a fraction of a representative adult - get around this problem. There are conceptual questions regarding the construction of such scales which led us to decide to use per-capita expenditure (or income), although this practice can certainly be improved. Finally, there are fixed costs in setting up and running a household and smaller households cannot spread these fixed costs over several household members. Source: Ray, 1998, pp.250-256. 7. Third, there are technical difficulties in measuring poverty and its evolution. In developing countries household income is difficult to measure because, among other things, a number of activities, products and services remain unrecorded. Many rural transactions are not recorded in cash and the volume of illegal transactions can be large. Also, the questionnaires of the various surveys do not use a consistent and common methodology, which make their comparison difficult. Finally, surveys are based on samples or subsets of households, which are designed to reproduce the whole population. However, by nature, these samples can never be exact. This is particularly true in the DR 4 where a large number of Haitian immigrants have an undefined legal status, fear deportation and Dominican officials, and consequently remain unaccounted for in most surveys. Hence, poverty rates calculated from these sample surveys necessarily carry margins of error, which have never been accounted for in previous analyses of poverty in the DR. C. Methodology 8. The main objective of this section is to establish a consistent methodology to analyze the evolution of poverty in the DR since 1986. We use three household surveys to conduct our analysis: the 1986 Tufts University survey, the 1992 FEyD survey and the 1998 ENGIH survey. We could not use other surveys for various reasons: the 1984 ENIGF survey uses a different methodology, the 1989 Central Bank survey focuses exclusively on social expenditure while the 1991 ENDESA survey does not include information on revenues and the 1996 ENDESA has not been structured to analyze revenues. Also, data from previous surveys is not available. C1. Definition of Poverty Lines 9. We construct poverty lines using the cost of basic needs method. Under this method, we first define an extreme poverty line. The extreme poverty line is defined as the cost of a normative food basket which individuals need to meet their energy requirement of 2,161 calories per diem. Obviously, many food bundles can provide this requirement. However, some food bundles while providing the necessary calorie intake do not contain the necessary nutrient complement for a healthy life. Indeed, the nutrients we consume are conventionally divided into five categories: proteins, carbohydrates, fat, vitamins, and minerals; and a person cannot make up for deficiencies in one by consuming more of another. For example, supplementation of dietary energy does not improve children's health if their diets continue to have insufficient quantities of minerals and essential amino acids. What is required is a balanced diet where the various nutrients appear in their required quantities. Admittedly, an individual can spend more on food and still suffer from a deficiency in any one nutrient. However, an individual who cannot afford this basic food basket is unlikely to simultaneously meet the nutrient and calorie intakes required by the body for internal functions, but also in order to do work. Consequently, the food basket that we consider is that developed by the Fundaci6n Economia y Desarrollo in its 1992 analysis of poverty in the DR (Table 1.3). Based on the 1992 survey, the daily per-capita caloric intake of the first quartile of the population (i.e., the poorest 25 percent of the population) was 1,766 calories. Since the daily per-capita caloric intake of the first quartile is below the energy requirement of 2,161 calories per diem, it is necessary to expand their intake of 1,766 calories to the required 2,161 calories by using a factor of 1.22 (i.e., 1.22=2,161/1,766) in order to calculate the normative food basket and hence, calculate an extreme poverty line. We then estimate the cost of the food basket in 1992 using prices derived from the survey itself. This cost is DR$252.1 per month. There are alternative ways to measure poverty. The National Planning Office (ONAPLAN) derives higher poverty rates based on a multivariate analysis. 5 Table 3: Normative Food Basket, Prices, and Extreme Poverty Li es by Period Daily per- Calories Daily Daily required Daily required Nominal price per pound of Monthly cost of capita per pound per-capita per-capita caloric per-capita food components normative food basket consumption caloric intake intake consumption (DR$) (DR$) (Pound) (1992 Survey) (Quartile 1)" (Pound) (1992 Survey) (Quartile 1) (Quartile 1) (I) (II) (III) = (I)x(II) (IV) (III)xl.22 (V)=(I)xl.22 (VI) (VII) = (V)x(VI) 1992 1992 1986 1992 1998 1986 1992 1998 Common rice 0.283 1586.7 449.7 550.2 0.347 0.49 4.04 5.74 5.2 42.6 60.5 Quality rice 0.076 1668.1 126.8 155.1 0.093 0.54 4.40 6.25 1.5 12.4 17.7 Red beans 0.058 1514.9 88.3 108.1 0.071 1.73 7.87 14.41 3.8 17.1 31.3 Other beans 0.016 1496.5 24.5 30.0 0.020 2.31 10.53 19.28 1.4 6.4 11.8 Green 0.312 407.5 127.2 155.6 0.382 0.19 1.43 2.80 2.2 16.6 32.5 plantain Yucca 0.134 410.9 54.9 67.2 0.163 0.29 1.34 4.09 1.4 6.7 20.3 Green banana 0.250 470.8 117.7 144.0 0.306 0.13 1.00 1.95 1.2 9.3 18.1 Chicken 0.083 814.7 67.6 82.7 0.102 1.98 8.62 14.33 6.1 26.6 44.3 Beef 0.016 431.0 6.7 8.2 0.019 2.53 14.65 19.08 1.5 8.5 11.1 Pork 0.010 407.2 3.9 4.8 0.012 3.02 14.97 20.55 1.1 5.4 7.4 Sausage 0.007 1393.9 9.9 12.1 0.009 :2.81 23.07 25.05 0.7 6.1 6.6 Dry fish 0.007 685.3 5.0 6.1 0.009 3.23 20.07 29.14 0.9 5.5 7.9 Liquid milk 0.141 637.0 89.5 109.5 0.172 0.33 2.16 3.21 1.7 11.3 16.8 Egg (unit) 0.186 71.4 13.2 16.2 0.227 0.22 1.01 1.10 1.5 7.0 7.6 Bread 0.023 1305.8 29.8 36.4 0.028 0.70 7.41 13.98 0.6 6.3 11.9 Pasta 0.027 2322.4 63.2 77.3 0.033 0.61 6.86 8.75 0.6 6.9 8.9 Vegetable oil 0.063 4036.5 253.9 310.7 0.077 1.94 9.34 11.84 4.5 21.9 27.7 Sugar 0.065 1798.0 116.7 142.8 0.079 0.31 3.03 4.72 0.7 7.3 11.4 Others2_ 117.6 143.9 4.5 28.2 42.5 Total 1,766.0 2,161.0 41.3 252.1 396.2 " UNDP (1989) estimated a daily per-capita energy requirement of 2,161 calories for an average person in the tropics. Based on the 1992 survey, the daily per-capita caloric intake of the first quartile of the population (i.e., the poorest 25 percent of the population) was 1,766 calories. Since the daily per-capita caloric intake of the first quartile is below the energy requirement of 2,161 calories per diem, it is necessary to expand their intake of 1,766 calories to the required 2,161 calories in order to calculate the normative food basket and hence, calculate an extreme poverty line. Columns (IV) and (V) represent the per- capita caloric intake and consumption of the first quartile's food basket after expansion (1.22=2,161/1,766). " Others consists of 30 other food items (see Dauhajre et al (1994), p. 126). Their prices in 1986 and 1998 were calculated by deflating the 1992 price by the January-September 1986 and July-August 1992 food, beverages and tobacco inflation rate. In 1998, we inflated the 1992 value with the July-September 1992 and October 1997-September 1998 food consumer price variation. Note: We used the price variation of his near substitute if the value of one product was not available Source: World Bank calculations, based on Dauhajre et al (1994) and Central Bank (1986, 1998). 10. The second step consists of the construction of a normative consumption basket in 1992, which incorporates the estimation of a reasonable allowance for non-food consumption including rent.4 This allowance is determined following a methodology based on the actual non-food expenditures for households with per capita consumption near the extreme poverty line5 (Table 4). The monthly cost of this normative consumption basket was DR$554.4 in 1992. 4 The 1986 and 1992 surveys do not contain the necessary information to adjust for the fact that some households own their house and consequently do not pay rent. We erred on the conservative side and included rent in the basic consumption basket. This may lead to some overvaluation of poverty to the extent that some poor households own their house and do not have to pay a rent. In practice, the average expenditure on non-food items was computed by taking average expenditures on non-food items for households with food consumption equal to the food poverty line plus or minus 10 percent. 6 Table 4: Normative Food Basket, Prices, and Poverty Lines by Period 1986 1992 1998 Item Aggregate Percentage Aggregate Percentage Aggregate Percentage Consumption Consumption Consumption (DR$) (DR$) (DR$) Food basket (Extreme poverty line) 41.3 38.4 252.1 44.9 396.2 45.7 Beverages and tobacco 2.3 2.1 14.4 2.6 21.7 2.5 Transportation 8.2 7.6 34.5 6.1 51.9 6.0 Water, electricity and oil 1.2 1.2 5.3 0.9 7.9 0.9 Personal cleaning and services ' 5.8 5.4 31.4 5.6 47.2 5.4 Education 2.8 2.6 12.9 2.3 19.4 2.2 Health 5.8 5.4 26.3 4.7 39.6 4.6 Clothing and shoes 6.2 5.7 33.6 6.0 50.5 5.8 Entertainment and culture 4.5 4.2 20.3 3.6 30.5 3.5 Rent 2 24.4 22.7 102.4 19.4 168.0 19.4 Furniture and domestic appliances 2 5.0 4.6 21.1 4.0 34.7 4.0 Poverty line (DRS) 107.5 100.0 554.4 100.0 867.7 100.0 Memo: Poverty line (DR$) 107.5 554.4 867.7 Extreme poverty line (DR$) 41.3 252.1 396.2 Poverty line (US$) 37.2 43.3 58.2 Extreme poverty line (US$) 14.3 19.7 26.6 Includes financial services. Derived for 1986 and 1992 using the 1998 share of total consumption. Source: World Bank calculations. 11. The third step consists of computing poverty lines and extreme poverty lines in 1986 and 1998 (Tables 3 and 4). These poverty lines are computed using the normative food and consumption baskets for the year 1992 while deflating their costs in other years using commodity prices as provided preferably by the surveys (1992, 1998) or by prices available from the Central Bank (1986). We obtain an extreme poverty line and poverty line of DR$396.2 and DR$867.7, respectively, in 1998. To put these poverty lines into the current context, this definition leads to an extreme poverty line of DR$483 at end-2000 and a poverty line of DR$1,080. 12. Our definition of normative food and consumption baskets fixed in time may be challenged on several grounds. It could be argued that using a common food bundle for the whole country is inadequate. However, the DR is a fairly small and homogenous country and while it is correct that households may reach their nutritional requirements with different bundles, differences in food consumption patterns across areas are limited. It could also be argued that prices vary by area and that using a fixed food bundle does not allow for substitution effects. However, this effect is also limited in the DR where prices are fairly homogenous across regions due to limited transportation costs.6 It could also be argued that the composition of the food basket consumed by the population changes with time. As an economy develops, new kinds of food become available, people substitute some kind of food for others and may well also modify their taste. However, different from some practices, we decided to keep the normative food bundle used to define the poverty lines constant over time. We do so for several reasons. First, this approach relies on the argument that ideally we want to fix a certain welfare level (associated with a fixed basket of goods) over time (Francke, 1997). Also, in international practice, this seems to be the preferred way of performing welfare comparisons in time (Ferreira and Litchfield, 1998; MacIsaac and Hentschel, 1996; Ravallion, 1994). Second, changes in the composition of the basic food basket are likely to evolve slowly with time: technologies take time to develop and tastes do not change overnight. By defining the food 6 The Central Bank used to publish price indices differentiating between municipal areas from 1976 to 1993. In 1984, the Central Bank constructed a national consumer price index. From 1984 to 1993, the Central Bank published price indices based on the two baskets developed in 1976 and 1984. In the 1998 survey, the Central Bank constructed three consumer baskets corresponding to the three following regions: national district, urban and rural areas outside the national district. Since February 1999, the Central Bank has been collecting information on these three indices. However, Dauhajre et al (1994) stated that prices in rural areas exceeded those in urban area by about 4 percent. 7 basket in the year 1992, which lies in the middle of the period under study 1986-1998, we limit the chance that it would vary drastically. Third, poverty lines are easier to interpret when the food bundle remains unchanged. Indeed, the extreme poverty rate represents the percentage of individuals who cannot afford the normative food basket while the poverty rate represents the percentage of individuals who cannot afford the normative consumption basket. Defining a different basket for each year would make this interpretation impossible. C.2. Definition of Welfare 13. The next step consists of defining a monetary measure of welfare. The fact that the surveys have different questionnaires makes it a challenging task. We analyze the difficulties met in defining comparable indicators on the revenue side. Since welfare ultimately derives from consumption, we would have liked to use a monetary measure based on consumption expenditures. However, an expenditure variable is only available for 1992 and 1998. In addition, this variable is not comparable in the two surveys. Unlike expenditures, there is an income variable in each survey. C2.L Revenues 14. The three surveys have similar questions related to income. We did not have access to the questionnaire of the 1986 survey. However, the methodology used for the 1986 survey was also used in 1992 to ensure comparability, which leads us to believe that revenue aggregates in 1986 and 1992 are comparable. Tables 5 and 6 contain a detailed description of the item included in the revenue aggregates. Annex I defines and analyzes the measures of poverty used in the paper. 8 Table 5: Definition of Revenue Aggregates 1992 Item Tufts 1986 and FEyD 1992 " World Bank Family business net Net income (total income minus input expenses) Included income provided for a business in which participate the majority of the family members excluding agricultural activity (F604) Remittances from outside Direct receipts, as payment or gifts (F6 10) Included the DR Remittances from within Direct receipts, as payment or gifts (F612) Included the DR Rent receipts Direct receipts from house rent, rooms, land, and Included equipment (F614) Self employment income Includes business owner and independent non- Included agricultural worker (F602/4/10) Public employment income Average monthly wages (F602/4/6), excluding fringe Included benefits Private employment Average monthly wages (F602/4/7), excluding fringe Included income benefits Non agricultural Average monthly wages (F602/4/9), excluding fringe Included employment income benefits Agricultural employment Direct payments for farm work (F602/4/8), excluding Included income farm owner Pension income and fringe Direct transfers from both government and private Included benefits institution (F606). Included fringe benefits and other income from social security Interests and insurance Interest and insurance receipts (F608) Included receipts Agricultural and livestock Income from agricultural output sales (F631/8) plus Included net income auto consumption (F630/02) plus income from livestock production sales (F623; F625) minus: Materials for harvest (E501/A), chemical fertilizers (E501/B), agricultural tools (E501/H), land preparation (E501/G), other agricultural expenses (E501/C), debt payments, formal and informal loans, (E501/D), land maintenance (E501/E), harvest expenses (E501/F), agricultural machinery rental (E501/1), livestock expenditures (E501/J), agricultural acquisitions (E501/K) and other expenditures (E501/L) Transfers Food donations received (C305/9) Included Other income Any other income perceived (F619) plus other Included income from any occupation (F602/4/13) "Dauhajre et. al (1994, p.131) stated that the 1992 questionnaire followed the guidelines of the 1986 Tufts University survey, in order to ensure the comparability. Note: Numbers in parenthesis refer to the following (xy/z): x corresponds to the questionnaire section, y is the question number, and z corresponds to a specific item inside a question. 9 Table 6: Definition of Revenue Aggregates 1998 Item ENGIH 1998 World Bank Rent receipts (domestic) Direct receipts from house rent, rooms, land, and Included equipment (9/7-1341,1351,1361,1371,1381) Rent receipts (external) Direct receipts from house rent, rooms, land, and Included equipment (9/13-2442,2452,2462,2472,2482) Self employment income Included (9/3-0801) Included (domestic) Self employment income Included (9/11-2102) Included (external) Employer contributions Included (9/1-0501) Included Remuneration in-kind Includes food and beverages (9/1-0411), Food Included prepared (9/1-0421), Transport (9/1-0431), Gasoline (9/1-0441), Other (9/1-0451) Employment income Includes wages and salaries from main, secondary Included (domestic) and other occupations (9/1 -0101), Other remuneration in cash (9/1-0301) minus taxes and deductions (9/1- 0601) Employment income Includes wages and salaries from main, secondary Included (external) and other occupations (9/12-2012) Fringe benefits Included overtime (9/1-0211), Fees (9/1-0221), Included Bonds (9/1-0231), Representation expenditures (9/1- 0241), Other (9/1-0251) Interests and insurance Interest receipts (9/ 7-1311,1321,1332); Insurance Included receipts (domestic) receipts (9/ 7-1421,1431,1441,1451,1461); Interests and insurance Interest receipts (9/13-2412,2422,2432); Insurance Included receipts (external) receipts (9/14-2542,25522562); Transfers (domestic) Includes Public transfers (9/ 6-1151), Pensions (9/ 6- Excluding public transfers 1111,1121,1131,1141), Free Transportation (9/ 6- in health and education 1201), Food donations (9/ 6-1191), Private sector transfers (9/ 6-1161), Non-governmental institutions transfers (9/ 6-1171), Inter-household transfers (9/ 6- 1181), Other transfers (9/6-1211,1221) Transfers (external) Includes Public transfers (9/12-2252), Pensions (9/12- Included 2212,2222,2232,2242), Free Transportation (9/12- 2282), Food donations (9/12-2272), Private sector transfers (9/12-2262), Other transfers (9/12- 2292,2302) Other income Includes inheritance domestic (9/9-1502), inheritance Included from abroad (9/14-2512), other income (9/9-1532), other income from abroad (9/14-2582), severance from abroad (9/14-2532), severance (9/9-1522), dividend (9/8-1471), dividends from abroad (9/14- 2572) 15. To make the income data comparable across surveys, revenues are corrected for differences in sampling stratification and made consistent with national accounts. First, the sampling frame differs across surveys. For example, 1,404 households were interviewed in 1986 while 4,810 households were interviewed in 1998 (Table 1). Each household represented in the survey is taken as a representative household and is multiplied by a coefficient (the expansion factor) so that the expanded sample is representative of the whole population. Expansion factors are themselves derived from census data: the 1981 census for the 1986 and 1992 surveys and the 1993 census for 1998 survey. Second, we use adjustment factors so that the income derived from the surveys matches the national accounts (Table 10).' 8 National accounts in 1998 relied on the outcome of the 1998 survey, which was made consistent with the national accounts so that the 1998 adjustment factor is one. For more details, see Carrasco, Mercedes and Carmen J Reyes, 1999, "Proyecto Metodoldgico de la Repzblica Dominicana para la elaboracidn de la Cuenta de Hogares a partir de la Encuesta de Gastos e Ingresos de los Hogares 10 Table 7: Adustment Factors Used in Surveys Year Survey Monthly average Monthly average Ratio Adjustment per capita income" per capita private Factors (survey) consumption (national accounts) () (2) (3) = (2)/(1) (4) = (3)/0.89 Jan-Nov 86 Encuesta Nacional de Ingreso-Consumo DR$132.6 DR$182.8 1.38 1.55 July-Aug 92 Encuesta Nacional de Ingresos y Gastos DR$1,078.6 DR$1,l28.4 1.05 1.18 ct 97-Sep 98 Tercera Encuesta Nacional de Gastos e DR$2,158.1 DR$1,916.2 0.89 1.00 In2resos de los Hoeares (ENGIH) Excluding public transfers. The 1998 ENGIH is compatible with the national accounts. Hence the adjustment factor is set to 1.00 and other ratios are derived accordingly. Source: World Bank calculations. C.3. Poverty Estimates and Standard Errors 16. We are now in a position to analyze poverty and its evolution over time. An individual is defined as extremely poor if the per capita revenue corresponding to his/her household is not enough to purchase the basic normative food basket while he/she is defined as poor if the per capita revenue corresponding to his/her household is not enough to purchase the basic normative consumption basket. Consequently, those defined as extremely poor in 1998 are those individuals whose monthly revenues are below DR$396.2, while those individuals whose monthly revenues are below DR$867.7 in 1998 are defined as poor. Under the same definition, at end-2000, a family of five who earns less than DR$5,400 per month is defined as poor, while the same family would be defined as extremely poor if it earns less than DR$2,465 per month. Table 8: Poverty: Statistics and Standard Errorstu Area Headcount ratio Poverty gap ratio Income gap ratio Poverty severity ratio 1986 1992 1998 1986 1992 1998 1986 1992 1998 1986 1992 1998 National 37.5 33.9 28.6 43.0 34.4 33.3 8.4 5.1 1.6 9.2 5.6 4.4 (2.5) (0.6) (1.2) (1.6) (0.5) (0.9) (1.0) (0.2) (0.1) (1.0) (0.2) (0.3) Urban zone 28.5 19.3 20.5 38.5 32.1 30.7 4.9 2.1 0.9 6.3 3.0 2.7 (3.0) (0.7) (1.4) (2.4) (0.9) (1.1) (0.8) (0.1) (0.1) (1.0) (0.2) (0.3) Rural zone 47.3 49.0 42.1 46.0 35.4 35.5 13.8 10.9 4.1 12.4 8.2 7.2 (4.2) (0.9) (2.1) (1.9) (0.5) (1.3) (2.6) (0.4) (0.5) (1.9) (0.3) (0.6) Standard errors shown in parentheses. Source: World Bank calculations. 17. All measures of poverty show an improvement in the 1990s. Tables 8 and 9 record poverty and extreme poverty by headcount ratio, poverty gap ratio, income gap ratio and severity ratio by area, including the estimated standard errors that take into account stratification and clustering of sample design. Based on the analysis of the surveys, poverty measured by the headcount ratio decreased from 37.5 percent in 1986 to 33.9 in 1992 for the period before declining to 28.6 percent in 1998. Graph 1 analyzes the evolution of the headcount ratio, including the standard errors that take into account stratification and clustering of sample design. The three columns indicate the range in which we are 95 percent confident that the true rates lie. Consequently, it cannot be concluded at a conventional level of confidence that poverty declined between 1986 and 1992. However, it can be concluded with reasonable confidence that poverty declined from 1992 to 1998. Poverty reduction has been lower in rural areas, decreasing by 5.2 percent over the period 1986-98, compared to a reduction of 8.0 percent in urban areas. All other poverty measures improved over the period 1986-92 and further improved during the period 1992-98. This outcome seems to indicate that the remarkable post-1991 economic growth (GDP growth averaged 6.4 percent during the period 1992-99) has trickled down to the poorest segments of the population. 11 Table 9: Extreme Poverty: Statistics and Standard Errors" Area Headcount ratio Poverty gap ratio Income gap ratio Poverty severity index 1986 1992 1998 1986 - 1992 1998 1986 1992 1998 1986 1992 1998 National 8.8 7.3 5.1 37.9 25.3 23.3 0.6 0.4 0.2 1.8 0.7 2.3 (1.3) (0.3) (0.5) (2.9) (0.9) (1.5) (0.1) (0.0) (0.0) (0.4) (0.1) (0.2) Urban zone 6.1 4.1 2.7 48.6 30.6 23.1 0.4 0.1 0.1 1.9 0.6 1.3 (1.2) (0.3) (0.4) (3.8) (2.1) (2.3) (0.1) (0.0) (0.0) (0.5) (0.1) (0.2) Ruralzone 11.6 10.6 9.0 31.9 23.2 23.4 0.8 0.7 0.6 1.8 0.9 3.9 (2.5) (0.6) (1.2) (3.1) (0.9) (2.0) (0.3) (0.1) (0.1) (0.6) (0.1) (0.4) IStandard errors shown in parentheses. Sm: World Bank calculations. Graph 1: Poverty Rates and Their Margins of Error 42.S 37.3 35.1 32.7 31.0 261 198 1992 1998 Graph 2: Distribution of Income Expressed in Multiples of the Poverty Line 00 90 so 70 V 6286 o 30 20 l0 0 0 2 PL 0 4 PL 0 6 PL 1 PL 2 PL 4 PL 8 PL 10 P. 20 PL 30 PL MeMly perpit le ( ofF y Uns) 12 Annex 1 Poverty Measures: Measurement Issues 1. With the conceptual issues in mind, we assume that we are able to define a poverty line, which is an income (or expenditure) threshold that is regarded as minimally necessary for "adequate" participation in economic life. People below this threshold are defined to be poor. 2. Consider an economy with n individuals where y, denotes the income of individual i. Let p be the poverty line. The question we ask is how can we measure poverty? 3. Headcount ratio. One natural measure is simply to count the number of people below the poverty line, which is the headcount (HC). If we are interested in the relative incidence of poverty, we might divide the number of poor by the population that is the headcount ratio (HR). HR = HC n 4. An obvious problem with the headcount ratio is that it fails to capture the extent to which individual income (or expenditure) falls below the poverty line. 5. Importantly, the use of the headcount as a measure of poverty systematically biases policy in favor of individuals who are very close to the poverty line. Since these people are the less expensive to get out of poverty, a government whose only objective is to reduce poverty may focus on them exclusively. 6. Poverty gap ratio. The poverty gap ratio corrects for this drawback and captures more directly the acuteness of poverty. The poverty gap ratio (PGR) is defined as the ratio of the income (or extra consumption) necessary to bring all poor people to the poverty line to the total income of the poor if they were all brought at the poverty level. Thus, the poverty gap ratio is defined by E (p yi) PGR = ' HC -p 7. Income gap ratio. Another way to partially offset this bias, and take into account the extent of poverty, is to use a measure of shortfall from the poverty line as a percentage of total income. The income gap ratio is defined as the ratio of the income (or extra consumption) necessary to bring all poor people to the poverty line to total income. The reason for dividing by total income is that the ratio is an indication of how large the poverty gap is with respect to resources that potentially may be used to close the gap. In this sense, the income gap ratio is not really a measure of poverty itself, but a measure of the resources required to eradicate it. The income gap ratio (IGR) is defined by E p - y IGR = I >i 8. A problem with the income gap ratio is that it may be made small by the presence of wealthy individuals. Indeed, some large revenues that stand above the poverty line increase the denominator while the numerator - which only takes into account the poor - remains unchanged. 13 9. The poverty gap ratio and the income gap ratio avoid the biases in policy, which would lead to favor the individuals who are very close to the poverty line. However, both the headcount and the poverty gap measures share an additional drawback. These measures ignore the important issue of relative deprivation among the poor. Indeed, a transfer of resources among the poor (as so long as they remain below the poverty line) does not affect these measures. 10. Economists have developed poverty measures that address this issue i.e., such that a transfer of income from any person below the poverty line to anyone less poor and which keeps the set of poor unchanged must raise poverty (weak transfer principle). The best known measures, which address this distributional issue, are in the class proposed by Foster, Greer, and Thorbecke [1984]. The poverty measures called the Foster, Greer, and Thorbecke (FGT) measures they proposed are: Ia_ - Y , P"= -., 2 . At a = 2 , the measure P2 is the poverty severity index, which is just about insensitive to the principle. 13. The FTG family of poverty measures also satisfies a convenient decomposability property since these poverty measures can be decomposed into contributions from different subgroups which is informative when monitoring changes in poverty. If the aggregate poverty measure can be written as a weighted average of the poverty measures for the rural and urban sectors, or for household by age, or by occupation of the head, then changes over time can be similarly decomposed thus helping to identify groups that are particularly at risk, as well as sometimes pointing to the underlying mechanisms. In particular, if sectors are denoted by s, and then there are S of them, we can write 1 S aS n Pa - n" - Pa= n s=1 Yi< P S =1 where n , is the number of people in sector s and paS is the Foster, Greer, and Thorbecke index for poverty within the sector. Consequently, changes in aggregate poverty can be assigned to changes in sectoral policy measures or to changes in the proportion of people in each sector. This is called the weak transfers principle because it restricts consideration of transfers to those occurring between poor people. 14 Causes of Poverty Reduction in the Dominican Republic: Growth and Income Distribution Jacqueline Mora-Bdez A. Introduction 1. During the period 1986 - 1998 the Dominican Republic (DR) evidenced a significant improvement in its poverty indicators. The poverty headcount index (HCI), as measured by the percent of population below the poverty line, declined from 37.5 percent in 1986 to 33.9 in 1992 and further to 28.6 percent in 1998. This significant improvements in poverty indicators for the period 1992 - 1998 might be reflecting the huge economic growth experienced after the stabilization plan in 1991, as GDP growth averaged 5.9 percent for the period (7.7 percent for the period 1996 - 1998). 2. The purpose of this paper is to analyze the marginal impact of both growth and changes in income distribution on poverty reduction in the DR. Based on these estimations the paper will make some simulations of future poverty alleviation under alternative growth scenarios. The paper is organized as follows. Section B discusses the methodological issues related to the decomposition of poverty reduction between "growth effect" and "distribution effect". Section C summarizes the results obtained using this methodology in the case of the Dominican Republic for the periods 1986 - 1992 and 1992 - 1998. Elasticities of poverty to growth are also shown in this section, as well as an international comparison of these elasticities. In Section D, using the previous findings, simulations of poverty reduction under different growth and migration scenarios are conducted. B. Methodology 3. One can identify two proximate causes of a change in poverty: a change in mean income level at given inequality, and a change in the inequality of income around the mean; the former can be thought of as the "growth effect on poverty" while the latter as a "distributional effect". Definition: An economy is defined by a vector w= (wI1 ,.,........*I WN) where w, represents the income of person i (w, > 0) and N is the number of individuals. Individuals are ranked so that Vi < j, wi < wi. We assume that wN > 0 i.e., there is at least one individual whose income is strictly positive. Define p as mean income: N N (1 N Definition: Given an economy w, the Lorenz vector L= (xj,x2x.,...*... XN) is defined by: Wk Vi C-[1, N], Xi k=1 Z Wk k=1 15 Note 1: ViE[1,N-1] 0 Xi 1 and xN =1 Note 2: Given a Lorenz vector L, the "traditional" Lorenz curve is the function: L : [0,1 [0,1] x --+L(x) such that: ViE-[0,N-l, -x < +, L(x)= x,+(N-x-i).(x,,.-x N N Proposition: The function: F : RN R NA W L) is a one-to-one differentiable function. Proo Given (p,L), there is a unique economy w such that F(w)= (,L). This economy is definedbyw, = N-p-x, and Vie[2,N, wi= N.*p(xi-xi_1) Definition: A poverty measure P is a function: P : R"N R Define z as the poverty line (an income below which people are considered poor), a commonly used set of poverty measures, that are function of per capita income, are the Foster, Greer and Thorbecke (FGT) poverty indexes: 1 .-Jx P. = 1- , i N j=z1 Where q is the number of poor (or the number of individuals) whose income is below the poverty line z 1 and a is a positive parameter such that the higher a the more the measure penalize the poorer individuals or the higher sensitiveness of the measure to income distribution. Head Count ratio (a = 0): Percentage of population living in poverty (or with incomes below the poverty line). 1 q z_-w HCI = - . N =1 Z HCI = i=1N 'We still assume individuals are ranked from lower to higher income. 16 N Formally: q p, and P I( if w z Poverty Gap ratio (a = 1): is a per capita measure of the total shortfall of individual welfare levels below the poverty line z . It is calculated as follows: 1 q - w q I Wi PG=-- =(Z ' N 1=z1 i= N N-z Proposition: any poverty measure can be expressed as: Prw)= P'(p,L) (2) That is, any poverty measure can be expressed as a function of mean income and the Lorenz vector. The examples given above can be written as a function of these two variables: Head Count ratio: q1 HCI =- N N Where q = p, and 1 0 f (x,- x,-N<1 Poverty Gap ratio: PG = q-_- _i_i A N ,. z Proof[ P(w)= P[F-'(p,L)]= P*(p,L) with P = PoF-'. We are interested in changes in poverty measures between 2 periods of time t and t' with t Monto de Presupuesto Institución Beneficiarlos % ransferencia ,(en RD$) (Afño) Viviendas Estudiantiles Programas Residencias Adquirir recursos para que Asoc. Asoc. Estudiantes del Llenar solicitud, ser del n.d. n.d. n.d. n.d. Estudiantiles Casa Estudiantes del Interior puedan tener interior, de bajos ingresos interior y mantener indice alto Pensión recursos mínimos para alquilar su casa (sobre 70 puntos) pensión y tener una alimentación Dir. Gral. Promoción adecuada Juventud Programas Residencias Habilitar y equipar edificio de 12 pisos Estudiantes meritorios de Capacidad de n.d. n.d. n.d. Estudiantiles construido por el gobierno y entregado bajos ingresos 280 estudiantes Programa Torre del a la UASD para servir de residencia a del interior Estudiante estudiantes meritorios de escasos recursos Universidad Autónoma Santo Domingo Producción y Empleo Producción y Empleo de Otorgar crédito a la juventud rural Jóvenes rurales n.d. n.d. n.d. n.d. n.d. jóvenes rurales organizada vía el Banco Agrícola, para organizados incorporarla a la producción Banco Agrícola/ agropecuaria. Programa está en fase FUNDEJUR piloto. Se abrió ventanilla de crédito de RD$10,000,000 Cooperativa de Contribuir a la reducción del Mujeres de bajos ingresos n.d. 400 n.d. n.d. 60,000,000 Producción Mujeres desempleo femenino mediante el apoyo oganizadas en grupos (a la fecha) (Costo total del en Crecimiento a la creación y cooperación de comunitarios proyecto) cooperativas de producción. A la fecha 8190 Dir. Gral. Promoción de solo funciona capacitación (estimado en la Mujer total) 138 Programa/ Objetivo Población Objetivo Mecanismo de Focalización No. Cobertura MontQde Presupuesto Institución Beneficiarios % Transferencia (n RD$), (Añ¿) IDSS Ofrecer pensiones de vejez e invalidez Empleados privados con Ser empleado privado con 15% 1998: Colizantes (1997) a cotizantes ingresos menores al salario ingreso inferior a dos salarios 488,648 (Grupo 48,000,000 Pensionados (1997) minimo mínimos 19,874 (mayores 65 30% mas pobre) Pensiones no Otorga pensiones no contributivas a Mayores de 60 años n.d. n.d. n.d. n.d. n.d. contributivas mayores de sesenta años indigentes SESPAS Pensiones a Civiles Pensiones otorgadas por instituciones n.d. n.d. n.d. n.d. 1998: gubernamentales 49,887,259 Programas para la Población General Salud Programa Venta de Medicamentos a personas de Universal Personas que van a boticas Diferencia de 1998: Medicamentos bajos recursos a precios bajos. ubicadas en barrios y precio de más de 227,649,961 Esenciales Donación materiales a hospitales y hospitales 50% (productos (PROMESE)* laboratorios de la SESPAS genéricos) Presidencia de la República Programas de la Ofrecer acceso a un servicio de salud Cobertura nacional con 1998: SESPAS de bajo costo eficaz y con tecnología atención particular zonas 3,543,862,065 adecuada rurales y barrios SESPAS marginados Servicios Médicos Ofrecer asistencia medica a los Miembros de las FFAA y 1997: miembros de las Fuerzas Armadas Policía Nacional 71,904,680 FFAA Nota: n.d. Indica que la información no está disponible o no se tienen registros de beneficiarios En el caso del programa de PROMESE no se tienen datos de beneficiarios y el programa no está focalizado a población mas pobre. 139 Prograína/ Objetivo Población Objetivo . Mecanismo de Focalzación No. Cobertura Monto de Presupuésto Institución Beneficiarios % Transferencia (en RD$) (Affo)> Vivienda** Programa Mejoramiento Ayudar a grupos poblacionales Población que vive en Mediante solicitud 863 Acum. Jul.96- Urbano asentados en ciudades cuyo hábitat condiciones precarias mejoradas Ago.99: demanda mejoramiento y mejoradas 117 22,497,013 INVI en ejecución Prom. Anual: 4,536 7,499,004 en proyecto Programa Viviendas Mejoramiento y/o reconstrucción de Familias campesinas de Mediante solicitud 275 Acum. 96-99: Rurales viviendas existentes, así como la menores ingresos sols. Habit. 11,894,729 construcción de viviendas nuevas 1,108 Prom. Anual: INVI en ejecución 3,964,910 6,843 formulación Programa Viviendas Construcción de viviendas nuevas Familias de ingresos bajos Mediante solicitud 2,731 nuevas Acum. 96-99: Nuevas terminadas para combatir déficit (menos 4 sal.min.) y 3,464 663,623,161 habitacional medios (entre 4 y 7 en ejecución Prom. Anual: INVI sal.min.) 7,747 221,207,720 formulación Bono para Vivienda Ofrece subsidio a las familias para Familias de ingresos Mediante solicitud 600 certificados Acum. 96-99: completar sus ahorros para adquirir medios de bonos 35,665,500 INVI (Prog. Especiales) una vivienda de los cuales 300 Prom. Anual: monet. 520 cert. 11,888,500 precalificac. Sols.Habitacionales Construcción de viviendas de Familias ingresos bajos Mediante solicitud 134 viviendas Acum. 96-99: Progresivas carácter progresivo 14,793,955 Prom. Anual: INVI (Prog. Especiales) 4,931,318 * En el caso de los programas del INVI, el mismo está orientado a diferentes grupos de población y es dificil estimar número de beneficiarios. Nota: n.d. Indica que la información no está disponible o no se tienen registros de beneficiarios 140 Programv/oveiv resideneós Mecismo de Felión N ntoades Presupuestw Institución Beneilciri % Transferencia (en RD$) Viviendas de Reparaciones de viviendas de Familias ingresos bajos Mediante solicitud n.d. n.d. n.d. 505,819,256 Emergencia damnificados por el huracán Georges INVI (Prog. Especiales) Programa Tripartito de Construcción de viviendas con Miembros cooperativa Mediante solicitud 35 viviendas (CEA) n.d. n.d. n.d. Viviendas recursos del INVI-CEA miembros Porvenir y dominicanos cooperativa Porvenir e INVI- residentes en el exterior 535 viviendas INVI (Prog. Especiales) P motores privados Programa Comunidad Reparación viviendas de bajo costo Familias de bajos ingresos Mediante solicitud n.d. n.d. n.d. 1999*: Digna 240,000,000 ONAPLAN Oficina Coordinadora Construcción viviendas de madera y de Familias de bajos ingresos Mediante solicitud 42,682 madera n.d. n.d. n.d. de Obras del Estado bloques 2,033 Presienciabloques de madera Suministro de Agua y Alcantarillado CAASD Provisión Agua y Alcantarillado en 455,507,605 CORASAAN Sto. Dgo. 205,650,955 INAPA Agua y Alcantarillado en Santiago 821,195,236 Fondo Saneamiento Realización pequeños proyectos de 252 pequeños 1999: Urbano Comunidad saneamiento en barrios del país proyectos 36,000,000 Digna (letrinas, cañadas, etc.) Informaciones suministradas por Comunidad Digna. 141 Programa/ Objetivo Población Objetivo Mecanismo de Focalización No. Cobertura Monto de Presupuesto Institución Beneficiarios % Transferencia (en RD$} (Ano) Asistencia Alimentaria Programa Comedores Venta de comida cocida a personas de Toda la población Universal Estimado en 14,204 n.d. RD$5 1998: Económicos* bajos recursos. Venden también a Las personas que vayan a (máximo) (Costo de la 70,833,485 empleados y empresas. Suministran comedores ración) Presidencia de la comida a las cárceles del país. República Programa Alimentos Proporcionar a las familias de bajos Toda la población Universal n.d. n.d. n.d. 1999: para Todos ingresos los productos de la canasta Las personas que van a 227,985,192 familiar a precios por debajo del puestos de venta INESPRE mercado. Plan Social de la Despacho de raciones alimenticias Toda la población Universal n.d. n.d. n.d. 1999: Presidencia y asistencia hospitalaria 620,000,000 Presidencia de la República Desarrollo Comunitario Pro Comunidad Realización de varias obras en áreas Areas marginales n.d. n.d. n.d. n.d. Acum. 96-99: rurales y urbano-marginales 343,810,471 Prom. Anual: 114,603,490 Programas para Grupos Especiales Educación Educación Especial Ofrecer educación de calidad a niños, Estudiantes con 1998: 9,560,879 niñas y jóvenes con necesidades necesidades especiales SEEC educativas especiales Asistenciales Ayuda Directa a 1998** Personas ¡ 13,319,426 Varias Instituciones * Para el caso de Comedores Económicos el programa tiene caracteristica universal y se asume que no atiende debidamente al porcentaje mas pobre de la población. Esto incluye los aportes directos a personas realizados por varias instituciones oficiales. 142 Institutional Aspects of Social Programs Rita Mena A. Introduction 1. In the Dominican Republic there has been no defined or clear strategy to combat poverty. The social programs that are being implemented by the Government show a high degree of centralization, particularly at the level of the Presidencia de la Repiblica. In addition, a high degree of interrelation is observed between the programs and there is a high degree of overlap between the programs carried out by different public institutions. This disorganization results from a lack of coherent, efficient and adequate social policies to meet the needs of those most in need. 2. The participation of the State in the social programs not only covers the design and supervision of the programs, but also the direct provision of the services. For example, the Presidencia de la Repliblica, through the Secretaria Administrativa de la Presidencia and the respective institutions in charge, carries out different social programs oriented towards children, youth, the rural population and the general population. In 1998, according to the Informe de Ejecuci6n Presupuestaria 1998 published by the Oficina Nacional de Presupuesto (ONAPRES), the expenditures of the Presidencia de la RepzWlica in these social programs were estimated to be DR$328.4 million, representing 0.84 percent of total public expenditure and 2.2 percent of social public expenditure.' 3. Since there is not a well-defined social public policy, the existing programs are usually characterized by a reduced coordination between them. Also, due to administrative and institutional weaknesses, some programs are not efficiently implemented. For example, there is no systematic registration of costs and beneficiaries, which makes the evaluation of the incidence of those programs very difficult. On the other hand, some of the programs are not well targeted, others could be better implemented by the private sector under state supervision and others lack coverage, particularly in health and education. 4. Nonetheless, during the last years, the Government has made efforts to increase the efficiency of the management of its social programs with initiatives such as Comunidad Digna which tries to unify the different social programs in order to constitute a "a group of strategies of integral social intervention, that takes into consideration economic, social, political, gender, cultural, and environmental factors."2 5. In this paper we will present a description of the institutions in charge of the social programs carried out by the Dominican Government, describing the programs and highlighting those institutional aspects that hinder the efficiency of such programs. Some recommendations regarding institutional and administrative aspects as well as options for change in the structure of the programs to increase coverage and efficiency will be presented. B. Ages 0-5: Early Child Development 6. Three public institutions carry out programs to benefit the population in this age group. The Consejo Nacional para la Nifiez (CONANI), a dependent of the Secretaria Administrativa de la Presidencia, Direcci6n de Protecci6n al Menor a division of the Secretaria de Estado de Salud Pfiblica y 1 This excludes funds assigned to the Plan Social de la Presidencia, which in 1999 totaled DR$620 million, almost two times of which was assigned to the rest of the programs carried out by the Presidency. In addition, resources assigned to Oficina Coordinadora de Obras del Estado and ProComunidad are excluded. 2Comunidad Digna Program, Oficina Nacional de Planficacidn (ONAPLAN). August, 1998. 143 Asistencia Social (SESPAS), and the Secretaria de Estado de Educaci6n y Cultura (SEEC), through its program of initial education. The following chart presents the organizational structure of the mentioned programs: I I _ _ ]i Ministry of the Presidency Ministry of Education Health Ministry CONANI Subsecretary of Technical Subsecretary of Social CIANIs and Pedagogical Issues Assistance General Direction of General Direction of Initial Education Children and Old Population Pre-schools Children Division Guarderlas 7. In 1998, the total amount of resources assigned to these programs totaled DR$36.4 million representing only 0.25 percent of social expenditure and 0.09 percent of total public spending. B.1. CONANI/Centros Infantiles de Atencidn Integral (CL4N1) 8. The Consejo Nacional para la Nifiez (CONANI) was created in 1979 with the objective of carrying out programs in centers, in favor of poor children. As a consequence, the following programs were designed: (i) Centros Infantiles de Atenci6n Integral Program (CIANI), for 2-6 year olds, (ii) Ayfidame a Ser Nifo Program (PASN), for 7-15 year olds, and (iii) Educaci6n Masiva Program, for youngsters. CONANI depends on the Presidencia de la Repfiblica, and even though it does not formally depend on the Secretaria Administrativa de la Presidencia, in practice, there exists total dependency on this office. This dependency holds not only for the monetary resources to be assigned but also for aspects related to procurements, selection and designation of personnel and budget distribution, which hinders the well functioning of the institution. Consequently, the quality of the services provided by the centers has been affected considerably. 9. CONANI received in 1998 an annual budget of DR$23.1 million, 84 percent of which pays for personnel services. The annual budget of this institution represented only 0.27 percent of the total budget of the Presidencia de la Repiblica and only 0.06 percent of total public expenditure, representing a slight 0.15 percent of social public expenditure. 10. According to a study carried out by Fundacidn Economia y Desarrollo in May 1998s, the availability of physical and human resources in CONANI is adequate. The selection process of the CONANI staff depends on their position. Usually the selected person is chosen out of three candidates. However, in other instances the selection is highly discretionary, the decision being made at the central level (Presidencia de la Reptblica). If needed, the personnel are trained by a group of technicians from CONANI. The centers have teachers to offer the educational component of the program, sometimes high school graduates that live in the same community. Also they have medical personnel, nurses or nurse Includes only resources assigned to Guarderias. If we exclude the program carried out by SEEC, these resources represent only percent of total public spending and a percent of social spending. 4 This program is not currently operating. 5 An6lisis del Gasto de Programas de la Presidencia de la Repdblica, Fundacidn Economia y Desarrollo, 1998. 144 assistants some of whom are paid by SESPAS who are in charge of the health and nutritional component of the centers. In case there are children with nutritional problems, a special diet for them is designed by the doctors/nurses. There are also psychologists and social workers that work directly with the parents of the children registered to assist them regarding hygiene, health and education of their children. In 1996, the total number of employees in the centers (both PASN and CIANI) was 653. 11. The total number of beneficiaries of the programs is estimated in 10,453 children, which is equivalent to less than 1 percent of poor children (belonging to the poorest 30 percent of the population) between the ages of 0-13 years old. This shows in fact the small impact that the programs carried out by CONANI has in the community. 12. There are important links between CONANI and other ministries that carry out similar programs such as SESPAS and SEEC. SEEC pays for 12 teachers while SESPAS pays part of the salaries of the medical personnel and give workshops on nutrition. 13. Regarding records and administrative factors CONANI and in particular the head office of each of the programs, must have a record on each child that is registered. Although information on the number of children was available, information regarding costs, other sources of income such as donations and the like, and potential beneficiaries are not known. . 14. Centros Infantiles de Atenciin Integral (CIANI): CONANI offers centers for integral care of children between the ages of 2 and 6, whose parents have a low income and live in poor sections of Santo Domingo, Santiago and El Seybo. The centers are established based on demand by the communities. 15. Before the installment of the center, CONANI completes a questionnaire (similar to a census) with information regarding the number of children living in the area, level of education, diseases affecting the children, information about their families, level of education of members of the family, jobs, the socioeconomic condition of the families, and housing and other services. 16. The CIANIs offer pre-school education, also covering other aspects such as nutrition, health, and social work with families. These services are offered free of charge. In terms of education, the CIANIs work with the curriculum prepared by the SEEC, but they are not recognized as formal educational institutions. 17. The program targets its services to children that live in the neighborhood where the CLANIs are located. In order to accept children in the CIANIs, the parents must go to register the children with the corresponding birth certificate and vaccination chart. 18. In 1996, the program had 430 employees, which results in one employee for every 19 children. In 1998, the program covered about 8,000 children at a total fiscal cost ofDR$17.4 million (about US$1.2 million or US$150 per child per year). This shows a coverage rate of 1.7 percent of the children in that age group that belongs to the poorest 30 percent of the population. B.2. Secretaria de Estado de Salud Piblica y Asistencia Social (SESPAS)/Direccidn General de Protecci6n al Menor/Public Day-care for Children 19. The SESPAS, through the Direcci6n General de Proteccidn al Menor, has implemented three programs for children and at-risk youth. These programs are conducted by the Departamento de Hogar Escuela, Departamento de Guarderias, and Departamento de Asuntos Juveniles, which depend on the Direcci6n General de Protecci6n al Menor. 145 20. The Departamento de Hogar Escuela, and the Departamento de Guarderias provide home- schools (hogares escuela) and day-care services to take care of children whose mothers go out to work. The Departamento de Asuntos Juveniles provides a rehabilitation program for convicted children. 21. Currently, there are 6 day-care centers with 1,214 children registered. These services are provided free of charge. A high degree of centralization of the decisions has been concentrated in the office of the Minister, especially in terms of resources (monetary, human and physical). In 1998, the Direccidn received DR$37.1 million, corresponding to 1 percent of the total budget of SESPAS and less than 0.01 percent of total public expenditure. 22. The SESPAS has signed agreements with religious organizations transferring them the management of some of the day-care centers. In those day-care centers directed by nuns there are extra resources, obtained through donations from several sources. Information regarding costs, beneficiaries and the like are not available6. The operational cost of each program was not available since the resources are distributed as needed according to past allocations and in some instances resources are transferred from one program to the other. 23. In addition to the services provided through the Direcci6n, SESPAS finances similar private institutions administered by religious groups, non-governmental associations and private sector. 24. Day-Care Centers (Guarderias Infantiles): In these centers an integrated attention is offered with several components: education, nutrition and health, recreation, education, and psychological and social work component. The children can stay in the center from 7:30 a.m. to 4:00 p.m. and later depending on the mother's schedule. They serve the children a complete meal, including breakfast, lunch and two snacks. In order for the children to enter this program they must meet several requirements: the mother must present a letter from where she works stating her condition as employee, a vaccination chart for the children as well as his/her birth certificate. The selection is made in the Direcci6n taking into consideration the information given as well as rooms availability. 25. In 1999, the total number of children in the institution is 1,214. This program has a very low coverage rate considering that 471,249 children in this age group belong to the poorest 30 percent of the population. 26. The number of employees varies between center. The total number of employees is of 266, averaging 5 children per employee. These centers have a multidisciplinary team that includes teachers, doctors/nurses, psychologists, and social workers. In terms of monetary resources, the total amount transferred in 1998 by SESPAS was DR$405,500 for an average of DR$337 per child. B.3. Secretaria de Estado de Educacidn (SEEC)/Initial Education 27. The SEEC has a program of pre-school education intended for children in ages between 0-5 years old. The pre-school education is open to every one and offered free of charge. 28. The initial education embraces three levels corresponding to ages 3, 4, and 5 of which only pre- primary (age group 5 year olds) is offered. However, not only 5-year old children attend. In some schools, children of age 3 and 4 attend to. The absence of initial educational centers faces mothers to register their children in pre-primary even though they do not have the required age. ' At the time we visited the Direccidn they were processing the information gathered at the different centers in order to have a more recent estimate of number of children, resources available. 146 29. According to the information of the SEEC, the number of registered children during 1997-1998 was 103,864 with a total amount of resources available of DR$14.1 million. This corresponds to a total of DR$137 per child per year (excluding the Desayuno Escolar program). 30. The SEEC transfers money to private educational institutions in a discretionary way. B.4. Institutional Strategy for this Age Group: 31. In the Dominican Republic, there are only three public programs which benefit the age group 0-5. Of these programs, CIANIs are supposed to specifically target children from poor families. However, these programs cover only 24 percent of the children between 0-5 years old in the lowest 30 percent of the population. There is an increasing need for day-care centers for low-income children in the country. The fact that in public pre-primary schools there are children of even three years old evidence the demand for day-care centers. 32. A preliminary assessment of these programs shows very close links between the institutions that carry them out. The programs under CONANI and SESPAS are of a similar nature (in terms of the services rendered). The latter is directed toward taking care of children of working women. It should be noted that setting aside the SEEC program, which is considered mandatory by the Education Law of the country (specifically pre-primary attendance by children of 5 years old), the centers (CIANIs) from CONANI and the day-care centers (Guarderias) from SESPAS are the only public centers of this nature. 33. The resources spent in these programs would cover 270,000 children. This amount is similar to the number of children ages 2-5 that belong to the poorest 30 percent of the population. This offers a rough indication of the high cost of the programs implemented by CONANI and SESPAS as well as its high opportunity cost. 34. The low coverage of the programs may be a reflection of their institutional and administrative weaknesses. In the case of the CIANIs and the Guarderias, it appears that at their point of inception, these programs were not intended to have a high impact on the target population since they are governed by different types of constraints, which limits their performance. In fact, they are highly centralized and discriminated against. On the other hand, even though a record of children is available, information such as costs, impact and evaluation are not systematically registered. Such a factor makes it very difficult to assess the real impact of these programs. 35. CONANI is not reaching a high percentage of the population in need. Given the high social returns of programs oriented towards children in this age group and the poor performance by the existing programs it becomes necessary to redefine the roles played by CONANI and the Guarderias. It is difficult to determine whether the poor performance of CONANI is the result of the small amount of resources and the high degree of centralization to which it is submitted or if its performance results in the small amount of resources that is assigned by the Presidencia de la Reptiblica. 36. In the case of the Guarderias, the provision of this service through the SESPAS is questionable. They reach a very small percentage of children; have very limited resources and institutional capability to carry out a program of this sort. In this sense, even though there is a need to increase the coverage of There is a vast supply of nurseries and pre-schools at the private level, at an average cost of DR$ 1,000 per month (excluding registration fees). 8 Using as unit cost per child the current expenditures per child in the Initial Education program (excluding the expenditures of Desayuno Escolar program). 147 early childcare assistance for the poorest groups a reformulation of the existing programs is of extreme importance. There are several options to be considered: > The Initial Education program of the Ministry of Education should be strengthened and expanded to offer the first two levels they are supposed to offer. The target population would be 3-5 age group. > Government-sponsored community based child-care centers could be implemented. These are programs developed and operated at the community level--usually operated by mothers from the community--who have been given proper training and technical assistance on child development. The programs include nutrition assistance (food and nutrition education for caring mothers and parents), training in psychological stimulation of children and the application of growth and psychomotor stimulation monitoring techniques. Financing arrangements from the central or local government or non- government agencies, include payments to communities on the basis of the number children attended (per-capita) or other similar demand-service-based payment system. > These levels could be offered at the nurseries and child-care centers whose administration should be transfer to the SESPAS. There is no need of having two public institutions (Presidencia de la Repziblica and SESPAS) administering two different programs oriented to the same population. These programs should be unified into a single program that could be made dependent of the SESPAS. Coordinating actions between the formal educational systems, the private sector and the communities should be made in order to incorporate them in the process. > Since SESPAS already has agreements with some religious orders (nuns) that are in charge of some of their nurseries (they administer 4 out of the existing 6) the possibility of transferring all the nurseries to these nuns should be evaluated. > In the case of CONANI, there is the possibility of promoting the participation of the private sector and NGO, as well as the community in which the center is located. In that sense, the government could sponsor child-care community centers in which the administration of the resources will be the responsibility of the community in charge with close supervision of NGO and religious institutions that exist in the area. The government will have limited participation in the decision-making process of these centers, regarding use of resources, but since the resources are coming from the government supervision and evaluation of how these resources are being used is expected. 37. Finally it needs to be mentioned that the new Social Security Law establishes under the family health insurance the creation of Estancias Infantiles to take care of children (between ages 45 days-5 years) of working parents. They will offer services similar to those provided by CIANI/Guarderias and pre-schools. These Estancias Infantiles will be managed by the Instituto Dominicano de Seguros Sociales (IDSS) and will be financed by public funds, private institutions, donations and a 0.1 percent of the contribution paid for the family health insurance. It is interesting to notice that even though SESPAS operates Guarderias Infantiles there is no mention, in Chapter 4 of the referred law, of what is going to happen with such a program or with the CIANIs operated by CONANI. Moreover, the law establishes the Consejo Nacional de Estancias Infantiles, formed by representatives of SESPAS, IDSS and SEEC, among others, but information regarding the participation or coordination between CONANI, the Direcci6n de Protecci6n al Menor or SEEC is not included. 38. It can be assumed that this program will duplicate the roles of the existing ones, without any coordination or interrelation. Since it is a fact that more programs which target this age group are needed, the creation of the Estancias may not be an efficient solution to the problem. Besides, the IDSS has proven to be a very inefficient manager and it cannot be assumed that its institutional capabilities will improve merely by a new law that reduces its scope and functions. 148 39. The organizational structure proposed will be as follows, where the Ministry of Education will be in charge of pre-schools and nurseries, where the latter could be managed by NGO's from the communities, or religious groups, with the supervision and monitoring of the SEEC: Ministry of Education Subsecretary of Technical and Pedagogical Issues General Direction of General Direction Initial Education of Community Participation I II Pre-schools Nurseries and NGO's, Religious Day-care centers Groups, Parents Associations, etc. C. Ages 6-13: Basic Education 40. Two public institutions carry out programs oriented toward this age group: CONANI, and the Ministry of Education. It is difficult to estimate the total amount of resources assigned to these programs. Approximately, DR$4,000 million has been estimated, representing 10.2 percent of total public spending. 41. The programs are organized as follows: Ministry of the Presidency Ministry of Education CONANI Subsecretary of Technical National Institute of PASN and Pedagogical Issues Student Well-Being BECAS PARA MAESTROS -BECAS PARA ESTUDIANTES DESAYUNO ESCOLAR C.1. CONANIAyidame a Ser Nifio Program (PASN) 42. This program (PASN) is oriented toward at-risk children/youth between 7-15 year who belong to low-income families work or live in the street, but remain attached somehow to their parents. The program captures children through the social workers who work in the centers. On some occasions the parents come to the centers to register their children or some children come to the centers by themselves. The social workers work with children living in the area where the centers are located. The number of children registered in these centers is 2,443 currently, most of them between 7-10 years old. These centers are located not only in Santo Domingo but also in some provinces of the South, East and North of 149 the country. The children are supposed to leave the centers once they finished four years of basic education, regardless of age. The number of children who completed the program in 1996 was 965, out of 2,443 children registered (a rate of 40 percent). 43. The program offers integral care with the following components: health, education, psychology and social work. These children have little if any education. Also the PASN works with children to transfer the children who are not accepted in the formal education sector because they are over age. The main object of the program is to offer four years of basic education in order to transfer the children to the formal public sector. 44. According to an assessment of the program carried out in 1998,9 the program administrators consider that the availability of physical resources was deemed appropriate, with the exception of transportation equipment. The availability of human resources was considered appropriate. In addition to the CIANIs, the PASN has a multidisciplinary team of teachers, psychologists, doctors and nurses, as well as personnel of lower qualification. The Ministry of Education as well as the SESPAS pays for some of the teachers and medical personnel. In 1996, there were 223 employees corresponding to an average of 11 children per employee. 45. In terms of monetary resources, it was estimated that the program receives DR$2,170 per child per year (US$133). In addition to these resources, in some areas a contribution of DR$25 (US$1.5) is charged to parents of the children. Also, some donations and external aid is occasionally received. C.2. Secretaria de Estado de Educacidn y Cultura (SEEC) 46. The Ministry of Education carries out several programs to benefit the children of this age group. In addition to basic education, SEEC offers scholarships for children, scholarships for the professors that teach at this level and a school-feeding program. C.ZL BasicEducation 47. The basic education program, for children between 6-13 years old is offered (it is mandated that the State offer this program). The program has eight levels, from first through eighth grades. The basic level of education is divided into two cycles: the first one goes from first through fourth grade, and the second from fifth through eighth. There is special emphasis on math and grammar. In recent years, some effort has been made in order to reduce repetition rates in the first cycle as well as dropout rates and over age. Primary education coverage is still far from being universal. Primary school attendance among 6-13 year olds is 82 percent across the entire population and only 74 percent for those in the poorest three income deciles. 48. Monetary resources transfer to this program has shown an increase in recent years. In 1998, the annual resources budget amounted to DR$2.6 billion'o (US$180 million) equivalent to DR$2,130 per child per year (US$145). 49. There has been increasing efforts by the SEEC to improve the quality of basic education. Among the measures taken in this direction are modernization of the curriculum, introduction of programs to improve the capacity and quality of teachers, programs of recognition of excellence for students from fifth grade and above (Programa de Reconocimiento al Mirito Estudiantil) which benefits students with scholarships, internships, etc. 9 Fundaci6n Economia y Desarrollo, 1998. to Figures excluding the Desayuno Escolar program. 150 50. It should be noted that the Ministry of Education transfers resources to private educational institutions of the private sector. C.2.iL Scholarships for Children to Study in Private Schools 51. The SEEC give scholarships to students to study at private schools. The Instituto de Bienestar Estudiantil, through its division of scholarships and juvenile interchange, assigns these scholarships. These scholarships are given in order to fulfill what was established in the 1991 ordinance No.7-75, which gives authority to some private schools to give their exams without the presence of examiners from the SEEC. In turn, those private schools would give 5 scholarships to the SEEC that will assign them accordingly. According to this, the SEEC does not pay for these scholarships. 52. At this time a total of 106 private schools are under the protection of the referred ordinance. There are 530 student beneficiaries of the program. The scholarship covers only tuition. Even though it is not clearly established, the program gives preference to those students who are already registered at a private school. Other requisites include letter of application, stating in what school the student is going or is actually enrolled, copy of transcripts from the ongoing grade, and photos of the student. The final selection is done according mainly to grades, and "other" criteria, which is not too clearly established. 53. Scholarships are maintained as long as students maintain an academic index of 80 points or higher. The SEEC meets with parents and students to give them some follow-up. Also, SEEC receives a copy of their grades, directly from the schools. C2.iii. Scholarships for Teachers 54. In order to increase the quality of basic education, the SEEC carries out a program to sponsor scholarships for teachers in both private and public schools. The Minister directly assigns the scholarships oriented to teachers of public schools. For teachers of private schools the assignment of scholarships is as follows: a) Schools pre-selected are those that have less than 100 students, apply the new curriculum, are located in urban-marginal areas and offer basic education. b) Schools pre-selected apply for scholarships and the corresponding educational district approves such applications. The applications are for studies of profesorado or for a bachelor in education at the universities that have agreements with the SEEC: Universidad Aut6noma de Santo Domingo (UASD), Universidad Nacional Pedro Henriquez Urefia (UNPHU), Universidad Catlica de Santo Domingo (UCSD), and the Escuela Superior Felix Evaristo Mejia. 55. At the moment a new master program in administration of school centers is being developed, in order to increase the qualification of the principal of the schools. 151 C2.iv. Instituto de Bienestar Estudiantil/Desayuno Escolar Program 56. The SEEC, through the Instituto de Bienestar Estudiantil, carries out the Desayuno Escolar program", whose objective is to increase students' nutrition. This program also provides incentives to the parents to send their children to school. 57. The Instituto de Bienestar Estudiantil is very well organized and adequately structured. It has highly trained personnel, some of whom moved from well-known private companies. It has more than 150 supervisors and a team of nutritionists, chemical engineers and microbiologists working in coordination to establish a feeding program which meets the nutritional requirements of children between the age of 3 and 14. They also work with SESPAS (Environmental Direction) and the Direcci6n General de Normas y Sistemas (DIGENOR), and laboratories such as the ones in Instituto Dominicano de Tecnologia (INDOTEC), Junta Agroempresarial Dominicana (JAD) and UASD. There is a high participation and collaborative effort of the communities, which participate in the cooking of foods, buying-selling of some foods, etc. 58. Initial targeting of schools was initially conducted according to the results of the Censo de Peso y Talla 1994 (a new census under preparation), Encuesta Nacional de Micronutrientes, and other criteria such as access, number of students, level of schooling, existence of organized communities. The program has been expanding and, in 1998, the Desayuno Escolar program reached 996,583 children all over the country. However, coverage is still far from being universal (coverage rate is about 70 percent across the entire population attending basic public schools). In 1998, the budget was DR$520 million (US$35 million). The program has resources provided by donors, such as the Programa Mundial de Alimentos (PMA). 59. Every six months the program carries out an evaluation of the program, with the participation of SESPAS and UASD, in order to measure the impact of the program and assess the quality of the food provided. There are strict controls to supervise the use of resources and the distribution of the rations. Also there is a well-supervised houseware where the food donated by PMA is stored. An evaluation study is currently carried out in order to determine whether the pilot project in Sabana de la Mar, municipality that corresponds to the Hato Mayor del Rey province, can be replicated in other remote areas with difficult access. 60. The Desayuno Escolar program conveys three different sub-programs: C.2.v. Urbano Marginal Program 61. This program provides a daily breakfast of flavored milk with cookie or egg bread (made with fortified corn flour). It extends to marginal sectors of urban areas. The cost of each ration, in 1998, food was of DR$3.75 (US$0.25). In 1998, the program provided 875,000 rations to children. SEEC signs contracts with suppliers from the private sector, usually in the communities where the schools are located, in order to buy from them the bread and milk supplied to students. There is close supervision of these suppliers in order to ensure that they prepare the same kind of bread (with the same nutritional component) under specified and required hygiene conditions. For example, they are compelled to use the corn flour sold by Maicera Dominicana, private monopoly that received from SESPAS a vitamin dosificator to fortify the flour with vitamin A, iron, folic acid and others. In 1999 a workshop was offered to the panaderos that supply the bread to the program in order to homogenize the supply of bread. Attendance to this workshop was compulsory. 1" This is only one of the program carried out by this Institute. The others include scholarships and exchange programs, schools cooperatives, teachers wealth and health (dental and eye care). 152 C.2.vi. Fronterizo Program 62. This program provides food (rice, oil, milk, meat, fish, fortified corn flour and beans) donated by the PMA to children at school in 10 provinces located in the frontier area with Haiti. Parents from the Asociaci6n de Padres y Amigos of each school cook the food. They provide gas and other ingredients to cook the food. According to SEEC figures, in 1998, the cost of the program, including administrative costs, was DR$21.8 million (US$1.3 million) and covered 119,883 children. C.viL Transferencia de Fondos Program 63. This is a pilot program that is being carried out in the Sabana de la Mar educational district. The funds are transferred from the central office in Santo Domingo to the district and through it to the corresponding committee to buy food for students that attend schools in remote and inaccessible areas. The funds are handed to the committee and are equivalent to the amount they will spend during the week in the procurement of the food. The weekly amount received by each school is DR$300 (US$18), which corresponds to an average of DR$2.25 per ration (US$0.14). In 1998, the program benefited 1,700 students. The food purchased includes oatmeal, bread, rice, milk, fortified corn flour, plantains, and eggs. C.3. Institutional Strategy for this Age Group: > Taking into consideration the institutional limitations of CONANI and the high cost of the PASN program the possibility to eliminate this program and strengthens the basic education program of the SEEC needs to be evaluated. Given that the SEEC is including some programs to work with school overaged children and children with special learning needs it seems that the population intended to be cover by the PASN could be attended in SEEC schools. Also there are some initiatives in the private sector, lead by religious organizations (as the program Yo Tambidn carried out by Pastoral Juvenil) that could receive those children and be expanded through government support. > The strengthening of programs carried out by the SEEC must be aimed to reduce the high rate of dropouts, increase enrollment and reduce repetition. This along with programs to improve the quality of teachers will contribute to improve quality of basic education. > On the other hand, an expansion of the coverage of the Desayuno Escolar program to cover rural areas must be sought. According to a mid-term evaluation to Transferencia de Fondos program2 this program could be extended to other communities with similar characteristics as Sabana de la Mar. Some of the results indicate that the program has contributed to increase school attendance rates as well as agriculture production of the area. The support and active participation of the community is another factor that should be considered as a positive result of this program. The evaluation makes some recommendations for the extension of such a program including that each school center must have its own kitchen, must have an Asociacidn de Padres y Amigos to the school, that District Commissions as well as Nutrition Committees be formally appointed, among others. In relation to the scholarship program it is not very clear that the actual program has an important impact to favor the population in need. In fact, it looks as the scholarships are given to the SEEC to pay for the "favor" of not having the examiners from the Ministry during mid-final exams. According to employees interviewed at the SEEC, it does not seem very "convenient" to finance poor children in private school due to the high cost of tuition at those schools. Nevertheless it is necessary to re-evaluate this program and to consider the introduction of a scholarship program to finance poor children in private school. Tuition in private schools varies from one school to another, depending on 12 Instituto de Bienestar Estudiantil, July 1998. 153 the region, and if in the city in what area of the city. It would be important to assess the quality of schools, define which schools have excess supply or would like to expand its places. 64. The proposed institutional organization for the programs oriented to this age group is as follows: Ministry of Education Subsecretary of Technical National Institute of and Pedagogical Issues Student Well-Being General Direction of BECAS PARA MAESTROS DESAYUNO ESCOLAR Basic Education II BECAS PARA ESTUDIANTES D. Ages 14-24: Secondary and Higher Education 65. Three public institutions carry out several programs intended to benefit the population in this age group. The SEEC, through its programs of Secondary Education, Technical Education and Adults Education executes formal educational activities for this group. The Direcci6n General de Promoci6n de la Juventud (DGPJ), under the Presidencia de la Repfiblica carries out different programs to benefit students coming from different provinces that study at the UASD or need assistance to pay some technical education. Finally the Secretaria de Estado de Trabajo (SET) will carry out a capacitating and orientation program (Quisqueya Joven) to help youth increase their abilities to find a job. This program is expected to initiate as soon as Congress approves the loan from the Interamerican Development Bank (IDB) that will finance its execution. 66. The programs mentioned (excluding the one from the Labor Ministry) received a total of DR$727.4 million (US$46 million), representing 2 percent of total public expenditure and 5 percent of social public spending. The organizational structure of such programs is as follows: I I -- I Ministry of the Presidency Ministry of Education Labor Ministry Administrative Secretariat Subsecretary of Technical Employment and Human of the Presidency and Pedagogical Issues Resources Office General Direction of Youth General Direction of General Direction of Promotion Basic Education High School General Direction of General Direction Technical-Professional for Adults Education Education 154 D.1. Presidencia de la Rephblica/Direcci6n General de Promoci6n de la Juventud 67. The Direcci6n General de Promocidn de la Juventud (DGPJ) sponsors several programs for youth between 14 and 25. The DGPJ works closely with the Secretaria Administrativa de la Presidencia, the Plan Social de la Presidencia and the UASD. 68. There is some evidence that the students are selected based on their political affiliation. Absence of controls and supervision of the programs is presented. Also there is no systematic information regarding beneficiaries, costs of the programs, number of students actually living in the pension-houses, and donations received through the Plan Social de la Presidencia. D.1.i. Programa Nacional de Becas 69. This program channels scholarships to low-income students. The scholarship consists of the payment of half the tuition in the centers of studies that have a signed agreement with the DGPJ. Between January 1997 and June 1998, 1398 scholarships have been given to students at the Universidad Interamericana and Instituto Tecnologico Santiago Apostol. Additional scholarships were given to students at the UASD and Pontificia Universidad Cat6lica Madre y Maestra (PUCMM). The students must apply for the scholarship through a written questionnaire and present a written certification of academic index. D.1.i Program of Housing for Students/Pension Homes (casa-pensi6n) 70. Through this program, the DGPJ and the UASD seek to provide housing to students who come to Santo Domingo to study at the public university (UASD). The students must fill out a questionnaire and present documentation to certify their economic situation along with a certification of studies and level of academic index (must be higher than 70), a certification stating the province from which they are from, a certification of good behavior and a medical certificate. 71. After that requirement is met, the DGJP along with the student association of the province of which the student comes from decide if the student is going to be included in the pension homes. Evidence suggests that this selection process is politically motivated. Every province has its student association at UASD, and they manage their pension home. The DGPJ channels approximately DR$21 million to pay monthly rents of the pension homes. Each association receives DR$10,000 (US$600) to pay for the rent and other expenses. Food is supplied every fifteen days through Plan Social de la Presidencia, which assigns rations of food according to the number of students at each pension home. Also the Plan Social de la Presidencia contributes with furniture for the homes, especially beds, refrigerators and stoves. D.2. Secretaria de Estado de Educaci6n y Cultura (SEEC) 72. The SEEC carries out several programs for the young in this age group. Most of these programs are associated to the formal and compulsory education system. Some programs also teach reading and other basic skills to the population between the ages of 14 and 45. D.2. Secondary Education 73. Secondary education for children between 14-17 years old is offered as compulsory by the State. The program establishes a four-year course, divided into two cycles of two years each. Each cycle includes two grades, organized in two academic semesters. The first cycle is identical for every student and the second cycle offers three different areas: traditional, technical-professional and arts. 155 74. The number of students registered for the 1997-98 year was 262,965 for coverage of 36 percent out of total population in this age group. Monetary resources transfer to this program has shown an increase in recent years. In 1998, the annual resources budget amounted to DR$469.1 millionl3 (US$32 million) equivalent to DR$1,784 per student (US$121). 75. The SEEC aims at reducing the rate of dropouts, repetition rates as well as to improve other educational indicators. The high opportunity cost of staying at school also leads the students to leave the school seeking a job. In fact, 55 percent of young people who were working in 1997-98 had not completed primary education. 76. Also the Ministry of Education transfers resources to educational institutions of the private sector. D.2.iL Technical-Professional Education 77. Technical-Professional education gives the student an education in science and technology. The students must have completed the first cycle of secondary education. With two more years of study the students graduate with a technical high-school degree. 78. This modality of high school is divided into three sectors: industrial, services and agriculture. In 1998, there were 154 official centers offering this education, with 24,717 students. Some of the centers operate as technical institutions, while others combine basic and secondary education. 79. Total amount of resources channeled through the SEEC to this program amount to DR$98.5 millionl4, for a total of DR$3,985 per student (US$271). In addition to this program, the SEEC transfers resources to private technical institutions that carry out similar programs. D.2.iiL Basic Education for Adults 80. Adults' basic education contains three different programs: 81. The basic education for adults aimed at increasing the educational level of the young/adult population who are poor and have not started or finished basic education. In 1998, there were 108,260 students in this program, with a budget of DR$153.5 million5 (US$10.4 million). 82. The SEEC with the support of the Government of Spain carries out the Programa de Alfabetizaci6n RALEB program, which in its first stage (1994-98) helped 57,562 persons in the 19 provinces where it was developed gain literacy. As a result, it reduced the illiteracy rate by 15 percent in Azua and by 22 percent in Barahona. 83. The Jornada de Alfabetizaci6n that SEEC carries out with the support of civil-political organizations is working with 31,450 adults, equivalent to 20 percent of total illiterates that have been identified. 3 Figures excluding administrative programs. 14 Figures excluding administrative programs. 15 Figures excluding administrative programs. 156 D.2.iv. Secretaria de Estado de Trabajo (SET)/Quisqueya Joven Program 84. This program is oriented to the population aged 15-24 who lives in urban areas and belongs to groups that live in poverty. This group has abandoned the regular educational system and is unemployed. The objective of the program is to increase labor opportunities of this group by offering capacitating programs and internship programs. 85. The program is intended to finance 1,500 courses and workshops in areas highly demanded by the private sector, including courses that require a high level of technical specificity, which will be designed by technical capacitating institutions. The curriculum includes two parts, a formal course followed by an internship. In order to have access to the program, the applicants must fill out an application and selection form that measures poverty as well as other socioeconomic conditions. With this application, the selection of the beneficiaries will be considered based on the established requirements. 86. The program will subsidize the participants in the courses covering transportation costs, stipends, medical and accident insurance. The amount of the subsidy must be less than the average salary earned by the poorest 40 percent of the population. 87. The participation of social institutions, from both the private and public sectors, is expected on both the promotion of the Program and the identification of possible beneficiaries. 88. The cost of the project is estimated at US$33 million, 70 percent of which will be devoted to capacitating courses. The remaining 30 percent will be used to strengthen the institutional capabilities of the SET. 89. The number of beneficiaries is estimated in 37,500 persons, equivalent to the 8 percent of this age group in the poorest 30 percent of the population. 90. The program has not started since Congress has not approved the loan made by the IDB for its implementation. At the moment, the SET is organizing the unit that will be in charge of the execution of this program. The systematization of the department, installation of software for registering and identifying beneficiaries is actually under way. D.3. Institutional Strategy for this Age Group: 91. There is need to improve quality of secondary schooling, expand the ongoing programs for teacher training, school aids, informatics, among others. 92. In relation to the programs carried out by the DGPJ they have a very small impact and seem to be highly discriminative. For example the program of Pension-homes is intended only to students at the UASD and the Asociacidn de Estudiantes from the provinces is the one that determines if the student is allowed or not to live at the pension-homes. 93. Regarding the Quisqueya Joven program, the program has not started. The SET will carry out the program, which is also intended to increase the institutional capabilities of the Ministry. Some considerations should be made to the programs carried out by Instituto Nacional de Formaci6n Ticnico Profesional (INFOTEP) since the Ministry of Labor transfer resources from private enterprises to this private institution that offers technical courses to the youth population. 157 E. Ages 25-64: Employment E.1. Employment 25-64 94. In the Dominican Republic there are very few programs especially designed for low-income groups and oriented to fight unemployment. Some existing programs have a very limited impact and others are informally created as temporary solutions to pressures from groups affiliated to political party in power. For instance, both Ayuntamiento del Distrito Nacional16 (ADN) and the Secretaria de Estado de Obras Ptiblicas (SEOP) hire people from low-income groups to clean the streets and its surroundings. 95. There is no relation or coordination among the existing programs. One program is directed toward single head of household mothers. Another program focuses on young population living in rural areas. Another program is essentially universal and intended to attend low/middle income persons seeking employment. E.1.L Secretaria de la Mujer/Programa de Cooperativas de Produccidn para Mujeres 96. This program started in 1998. It seeks to help women through the creation and operation of women cooperatives and the formation of small enterprises. At the present time, women's capabilities are increased through workshops, which teach them sewing and provide them training in cooperative management and gender issues. 97. The program has 400 women participating in workshops in Santo Domingo and other regions (in the North and Central area of the country). The person responsible of training selects single women heads of household and with an approved 6h level of basic education. In practice, there is a great number of women who do not meet the education requirement, so this last criterion is not closely followed. 98. The workshops are being offered in coordination with the INFOTEP. The guideline of Instituto de Desarrollo y Cridito Cooperativo (IDECOOP) is helping in the formation of the cooperatives. Once the cooperatives are formed, the women make some contribution, the government will give part of the resources needed to start the small enterprises that will give these women the opportunity to increase their level of income. E.1.iL Direccidn General de Promocidn de la Juventud (DGPJ)/Production and Employment for Youngsters 99. This program is oriented to the young between 14 and 18, who live in rural areas and has some kind of organization. This program will provide credit from the Banco Agricola de la Reptblica Dominicana (BARD) to the groups. The amount of resources will vary from DR$ 10,000 to DR$50,000 (US$600-3125). 100. The program is expected to be carrying out by the DGPJ, and the Fundacidn para el Desarrollo de la Juventud Rural (FUNDEJUR). Both will work in coordination with the BARD (that will provide the resources) and the Secretaria de Estado de Agricultura (SEA) (that will give the technical training in agricultural and animal production). 16 The Ayuntamiento is the public institution in charge of municipality issues. 158 E.1.ii Secretaria de Estado de Trabajo (SET)/Bolsas de Empleo Program 101. One of the main activities of the SET is to act as an intermediary between seekers and providers of jobs. With the approval of the Quisqueya Joven program it is expected that the SET will play a more active role in this process focusing on the entrance of young people to the job market. The Quisqueya Joven program includes the institutional strengthening of the SET, identifying potential beneficiaries of jobs and to facilitate job creations. 102. It should be said that there are several private institutions that offer this kind of service but usually are costly either to the company that is hiring or the person being hired. E.2. Institutional Strategy for this Age Group: 103. As in most developing countries, permanent programs to combat unemployment are scarce in the DR. According to the Central Bank, poverty is higher for those that are unskilled or work in the agricultural sector. In this sense, policies to face unemployment must be directed toward increasing productivity through improvement in education especially in technical education. 104. One option to be considered is the introduction of a targeted income-support program. Such a program should be directed towards vulnerable groups, like poor families with school-aged children (with benefits conditional on school attendance), women household heads, poor farmers, handicapped poor, among others. The design and implementation are crucial for this mechanism to be effective. F. Ages over 65 F.1. Pension system 105. The existing pension system in the Dominican Republic is characterized by the existence of different compulsory programs, voluntary programs regulated by law and other programs, including those offered by life security companies, private companies and the discretionary pensions granted by the Executive and Legislative powers. 106. The most important compulsory programs are those of the Instituto Dominicano de Seguros Sociales (IDSS), Fondo de Jubilaciones y Pensiones para los Empleados Pblicos (FJPEP), Instituto de Seguridad Social de las Fuerzas Armadas y la Policia Nacional (ISSFAPOL), pension funds of other autonomous public institutions and a non-contributory pension program by SESPAS oriented to the elderly. 107. The volunteer programs include the complementary pension programs of the private and public sector, programs regulated by special law (private enterprises), pension programs for special occupations, including workers in the construction sector (10,250 in 1992) in hotels and restaurants (6,000) and lottery ticket sellers (8,000) and drivers. 108. Additionally, there are payments of a one-year salary in case of an employee's death of the Central Government and for employees of autonomous institutions, paid by the Instituto Nacional de Auxilios y Vivienda (SAVICA). FLL Instituto Dominicano de Seguros Sociales (IDSS) 109. The IDSS is the office in charge of the social security system of the private sector. It depends formally on the SESPAS. The President of the Board of Directors is the Labor Minister, and the Director 159 General of the IDSS is appointed by Decree of the Presidencia de la Repziblica. In 1997, 75 percent of the population between 18 and 60 years old (3.2 million) was not formally covered by a pension program. Of the population actually covered, 61 percent were covered through the IDSS. 38 percent of the population was covered by the Pension Fund for public employees. 110. The law regulating the pension system that operates through the IDSS is the Law 1896 of Social Insurance, dated 1949. According to that law, a social compulsory insurance system was created including pensions and health. The system established a "pay-as-you-go" system where pensions are financed by contributions of actual workers. 111. All private sector workers earning a monthly salary of less than DR$2,976 must be affiliated with the social insurance system of the IDSS. Informal workers and independent workers are excluded from this system. 112. The contribution rate is established at 12 percent of the workers salary, with the employer contributing 7 percent, the worker 2.5 percent and the government with 2.5 percent. The public sector has rarely paid its contribution to the IDSS. 113. Retirement age is established at 60 years old. After 15 years of contributions, the system grants a pension equivalent to 40 percent of the average salary of the last four years of work plus 2 percent for each 100 additional weeks up to a maximum of 70 percent of the average salary. As of December 1997, 82 percent of the beneficiaries were receiving the minimum pension of DR$ 1,000 monthly (US$60). 114. In 1997, IDSS total income was DR$1.6 billion (US$116 million), of which 80 percent comes from contributions and 10 percent from investments. The number of contributors was 488,648 while 20,484 elderly people were receiving a pension and 5,642 others received pension for incapacity. Over the last 10 years IDSS average coverage is estimated at 15.5 percent of the Poblaci6n Econdmicamente Activa (PEA). 115. The Social Security System administered by IDSS is highly inefficient. In 1997, it had one employee per 39 contributors, one of the highest ratios in Latin America. F.1.iL Fondo de Jubilacionesy Pensiones de los Empleados Piblicos (FJPEP) 116. The Law 379 of December 1981 regulates the FJPEP. This law established a pension system for employees of the Central Government. 117. The funds for pension payments come from the public budget through the Fondo de Pensiones y Jubilaciones Civiles. Public employees pay a contribution of 4 percent of their salary to the FJPEP. Pensions are granted to those with 20 years of service or 60 years old. Those who have 30 years of service can automatically receive their pension independently of their age. All employees of the Central Government contribute to this system, including the Presidencia de la Repziblica. Some employees of decentralized institutions also contribute to the system. 118. Monthly pension payment is equivalent to DR$1,014 (US$62) for those pensioned before 1996 and DR$1,500 (US$92) for those newly pensioned. 119. Pensions are granted through the Consultoria Juridica del Poder Ejecutivo through sometimes a long process. Sometimes it is carried out with a high sense of discretion and the approval process usually takes several years. The Secretaria de Estado de Finanzas is the institution that controls monthly payments of the pensions. 160 120. By July 1998, the government paid, through FJPEP, around 25,695 pensions, for a monthly total of DR$28 million (US$1.9 million). Also, the government contributes to other public funds and to complete pensions through the FJPEP, with an amount of DR$70 million monthly (US$4.8 million). F.1.iiL Instituto de Seguridad Social de las Fuerzas Armadas y la Policia Nacional (ISSFAPOL) 121. The Fuerzas Armadas y la Policia Nacional have their own Social Security Institute created by Decree in 1982. This social security system includes health, pensions and other social benefits. 122. Pensions are financed with contributions of active members amounting to 6percent of their salary. If total contributions are not enough to pay total pensions, the government pays the necessary amount. F.1.iv. Other Laws 123. There are several law that regulate the pension system for workers in specific sectors: Law 250 of 1985 established a Fund for workers in hotels and restaurants; Law 10-91 creating a Pension and Social Protection Institute for Journalists; Law 146 of 1983 creating the Pension Fund for workers in ports; Law 6-86 was established a Pension Fund for workers in the construction sector. 124. In addition, SESPAS has a non-contributory program that pays pensions to people over 60 years old, with a very low-income that are not covered by any of the systems mentioned above. Pensions paid by SESPAS are very low, only a monthly amount of DR$200 (US$12); in 1992 around 9,283 pensions were paid. F.1.v. Private Pension Funds 125. There does not exist any institution to regulate pension plans of private companies. The internal pension plans are included among the benefits for workers of some companies. It has been estimated that there are around 120 of these plans covering around 80,000 individuals. 126. In 1998, some private institutions of the financial sector established the Administradora de Fondos de Pensiones that will offer pension plans for all individuals. The companies are not regulated by any special law and were created according to the Cddigo de Comercio. F.1.vL Some Final Issues and Comments 127. The actual proposal for reforming the pension and health insurance system establishes a new social security system. The pension reform will be based on three pillars: one subsidized that will be financed by the government for poor, handicapped and unemployed persons, one semi-subsidized for independent workers that earn low and unstable salaries; and a contributory regime for those working in the public and private sector. 128. The Law establishes a National Council of Social Security (CNSS) that will be a public institution in charge of regulating, supervising and directing the entire system. This Institution will be funded through the National Budget and its president will be the Minister of Labor. The Institution will be administered by a General Manager appointed by the Executive power out of three candidates recommended by the Council. 161 129. The Law also establishes a Superintendencia de Pensiones and a Superintendencia de Salud y Riesgos de Trabajo that will regulate matters concerning the pension system and the health system, respectively. 130. According to the Law, the IDSS will be converted into an institution that will administer risks, provide health services and assistance in case of job accidents. It will maintain its condition as a public institution, but the functions of regulating and supervising will be transferred to the CNSS. Also the law gives 4 years to this institution to increase quality, efficiency and productivity during which the State will give it a temporary monthly subsidy. 131. It is important to evaluate the labor costs of this proposal. Not all private companies actually have a pension fund. The employer will have to pay 7.12 percent of the contribution for pension and a xx percent of contribution to the health system. 132. The Government will finance the subsided pillar. Also contributions to the IDSS will be made during the 4-year transition period. In addition, the Law establishes an increase in the pensions given by the non-contributory system that actually operates through SESPAS. In fact, in the law it is not very clear the difference between the assistance pension and the pension given through SESPAS. Since both are in fact non-contributory pensions, they should be unified and only given through SESPAS or through the CNSS. G. Programs Oriented to the General Population G.1. Food Assistance 133. The Government carries out three different food assistance programs: two of them are carried out directly by the Presidency (Comedores Econ6micos and Plan Social de la Presidencia) and one is carried out by the INESPRE, a commercialization bureau of agricultural products. The institutional organization of such programs is as follows: Ministry of the Presidency Comedores Econ6micos Administrative Secretary of the Presidency L Plan Social de la Presidencia INESPRE PRO-ALTO 162 G.1.i. Presidency of the Republic 134. The Ministry of the Presidency of the Republic carries out two food assistance programs: Comedores Econ6micos and Plan Social de la Presidencia. Each of them has a different executing agency: Comedores Econdmicos has the executing agency of the Comedores, while Plan Social is carried out through the Administrative Secretary of the Presidency. + Comedores Econ6micos 135. The program of Comedores Econ6micos was created in June 1972, through Decree Number 2052, with the purpose of establishing a service for the community so that it could obtain an adequate intake of food as part of social development. The main objective of this program is to sell food to people from low-income families. 136. In addition to selling food at pre-determined fixed places, a distribution process and sale of rations with mobile characteristics was established in 1999 with the creation of sale places that are not fixed in determined areas which could be in different locations in a week or in a given time, in order to reach high poverty areas of the country. 137. The program sells cooked food rations to all who goes to buy at the sale places, fixed or not. They also sell food to employees, private enterprises (usually for special occasions) and to the District Attorney Office (Procuraduria de la Repztiblica) to be distributed at Dominican jails. 138. In general, the Comedores have had a lack of the resources necessary to handle a program of this nature in an efficient way. Recently, in 1999 a modernization process was initiated which included the purchase of computers, transportation units (pickups, buses, motorcycles, automobiles and trucks). In addition to these, industrial and kitchen equipments were purchased to modify and restore six producers of comedores. 139. Regarding human resources, in 1997, they had 1050 employees, of which 665 worked in the production process and the remaining 385 in administrative chores. The personnel works for a little more than 6 hours per day, and different shifts are established for weekend labor that corresponds to the distribution of food to different prisons in the country. 140. The Comedores have no record of the number of direct beneficiaries, in terms of persons, homes, communities or of their socio-economic conditions.7 On the other hand, there are administrative and monitoring deficiencies such as the lack of trusted and systematic register of costs, produced rations, installed capacities, loss in the management of food, adequate inventory controls. It could be argued that with the installation of computers, the institution will be able to establish the necessary mechanisms to keep records of beneficiaries, costs, rations and all the necessary information for the efficient function of this institution. But there is not yet a system of controls, registration process or the like. 141. In 1999, the rations sold by the Comedores Econ6micos summed up to 7.4 million, of which 16.6 percent was sold directly to the public, 1.2 percent sold as credit, 4.8 percent were used up by the employees, 3.3 percent as donations to the poor, 74 percent sold to prisons and less than 0.1 percent delivered to the homeless of Hurricane Georges. If you compare this distribution with the one existing in 17 The study of Fundaci6n Economia y Desarrollo (1998) through a survey carried out at selling spots found out that the population served by this program earned in average the minimum wage and live in precarious conditions. 163 194-199618 it can be observed that in addition to the decrease of the number of rations sold, the higher part of these are assigned to the District Attorney Office to be distributed in jails, which contrast with the 36 percent assigned in the aforementioned period, in which 55 percent of the rations were bought by the public. The rest were used up by the employees, private companies or as donations to the poor. 142. In 1999, 69 percent of the income of this program comes from the National Budget. In addition to the resources assigned through Budget ($63.9 million), the institution received DR$24.4 million from sale of cooked rations as well as DR$4.1 million for salaries for sugar cane industry and Metaldom (for the payment of the incomes of the personnel related to the preparation and sale of the food in this company), as well as for other incomes. 143. It is important to point out that due to the transfer that it receives from the State, the sale of rations to the public by the Comedores have practically no competition, since there is no private supplier who could sell food for a price 156 percent lower than its production costs. In fact, the barras-comedores and fondas located in the neighborhood in which the comedores are placed, could be considered as potential competition to them, sell the food services between DR$15.00 and DR$25.00. Plan Social de la Presidencia 144. This program started in 1989 distributing baskets of basic goods to low-income families in an irregular way. In 1996 the program received complete support of the government to carry out several programs in favor of poor families in urban and rural areas. The programs included: food donations, hospital assistance, emergency assistance, donations of foods, etc. 145. The food distribution program distributes basket of goods (uncooked) to families. It is the most important program carried out by this office, since it absorbs 70 percent of the budget assigned to it through the Presidency. Each basket contains 14 items: rice, beans, sugar, pasta, tomato paste, milk powder, cocoa, oil, etc., with an estimated value of DR$70/basket. 146. The beneficiaries of this program were chosen based on the National Poverty Map (designed by the Planning National Office) and the Statistics National Office figures. The majority of the beneficiaries are located in provinces along the frontier with Haiti: Pedernales, Elias Pifia, Dajab6n, among others, which are also the poorest areas of the country. 147. The Plan employs about 500 people (for the food distribution program), including those working in the packaging and transportation process. 148. According to the Direction of this plan, the annual budget of the program is estimated at DR$600 million. But, these resources are not clearly presented in the budgetary reports published by ONAPRES, where you can not find as a program or activity carried out by the Presidency, the Plan Social de la Presidencia. It is difficult to determine the exact amount of resources allocated to this program. Even though the Director of the Plan Social stated that prior to 1996, the program was completely disorganized in terms of record of beneficiaries, costs, and the like, it seems that the situation has not changed much. The perception is that this is an assistance program to benefit those families (middle to low income) that have political ties with the government. 149. Also, there seems to be a high discretionary power by the Director in terms of the procurement of the food to be distributed and also where to allocate them. For some, political relations highly influence donations of the food baskets. 18 Fundacion Economia y Desarrollo (1998). 164 G.1.i INESPRE /Alimentos para Todos (PROALTO) 150. This program started at the Ministry of Agriculture and then was transferred to INESPRE, a public enterprise that buys and sells agricultural goods. At the beginning, the program started selling agricultural products, pasta, oil and cocoa (at subsidized prices) through mobile units in urban zones. They incorporated units in the "popular markets" established by INESPRE. At the present the program sells food only in these markets. 151. As the programs of "mercados populares" of INESPRE, there are not enough records registering the costs and benefits of this program (putting aside the distortion in prices that may arise in this program). G.1.ii Final Comments and Options for Food Assistance Programs 152. The programs stated here as food assistance programs exclude the distribution of food through CONANI and the School Feeding Program of the Ministry of Education. 153. In the case of Comedores Econ6micos there seems to be little justification for the government to carry it out. This program has lost its original objective and is being converted to the monopolist supplier of foods to the Prisons Direction. 154. Concentrating its operations on supplying food to the needy population in cases of emergency seems to be one future option for this program. Since it does not have a valuable infrastructure, in terms of areas of "expendio", warehouse, production units, the cost of reducing this program initially does not seem very high. The actual areas where the food is being sold can be used to distribute food to victims of hurricanes, fires, etc. Or, in some cases an evaluation could be made to determine whether some areas could be rented9 to private users. 155. The resources freed with such a reform will allow the government to expand other programs proved to be more effective, like the School Feeding Program, as well as to organize the setting up of a system to identify potential beneficiaries of social programs. 156. The Direction of Prisons must find other potential suppliers of food to prisoners. Contracting a private sector enterprise (it could be through a bidding process) to supply this food with arrangements similar as those it have with Comedores, could be a more feasible and efficient solution in terms of social returns. Another option could be to leave Comedores as the suppliers for food to Prisons. This option could be more "adequate" in political terms. 157. Another option includes the establishment of a mechanism of vouchers to assist with the poorest segment of the population that goes to Comedores to eat. Or these people could be assisted through an income support-program and attach it to school attendance or health care. In this case, it could be evaluated, through a system of register of beneficiaries, who are the people that attend the Comedores, that will not be able to have a "decent" meal, if this program is eliminated. 158. In addition, the elimination of the distribution of food through Plan Social de la Presidencia should be considered, due to its high degree of politicization. The existence of a program of this nature should be considered only for emergency cases. Plan Social could be left only with other assistance programs of emergency nature. 19 For instance, in Los Mina, (the largest Comedor in Santo Domingo) since the Comedor is located near the Hospital Maternidad de los Mina, the place can be rented to a private organization to convert it to a cafeteria to serve the Hospital. 165 159. In relation to INESPRE, the existence of this institution as a whole should be evaluated. The prices of agricultural products in the Dominican Republic are considerably higher than in other countries, which mostly affect the poor. In addition, the agricultural policy, which protects agricultural producers, need to be reconsidered in order to establish a system of direct subsidies, such as the one implemented in Mexico, that seems to be more effective. G.2. Housing 160. In the Dominican Republic the Government has not carried out a definite and coordinated housing policy. Traditionally many of the housing projects developed have had a strong political criterion. There has been a duplicity of actions through various public institutions: Coordinating Office of the Presidency, Supervising Office of the Presidency, Ministry of Public Works, National Institute of Housing and SAVICA. 161. According to the National Institute of Housing (INVI) the deficit of houses has been estimated to be more than 500,000 units, including not only the need of new units but also the need to improve the quality of the existing ones. 162. Since 1996 there has been a tendency to centralize public actions in the housing sector through INVI and to increase coordination not only within the public sector but also with the private sector, including participation of communities. G.2.iL INVI 163. This institution was created in the 1960s. At the present time it is the central institution for housing activities carried out by the government. INVI develops several programs oriented to different kinds of beneficiaries, with a total investment of DR$1,244.7 million and more than 70,000 units of houses built, in process of construction or improvement or in a formulation process. * Urban Improvement Program (Programa Mejoramiento Urbano): This program is oriented to help people that live in urban areas in units that need to be improved. The program includes not only the improvement of housing but also of living conditions as well. According to INVI, inter-institutional coordination is a key factor for this program. It encompass three different areas: 1) One that includes improvement of housing with the participation of the communities in favor of those living in precarious conditions; 2) One that includes improvement of housing without the participation of the communities in favor of those living in precarious conditions; and 3) One that includes individual improvement of houses. The main projects included here are: Saneamiento de Barrios, San Juan de la Maguana, Mejoramiento Urbano La Pifla, Mejoramiento Urbano Pueblo Nuevo en SJM, Resure, among others. Under this program, there are 863 houses that have been improved, 117 are being improved and there are around 4,536 units involved in projects that are being formulated. Investment in this program (from August 1996-July 1999) was DR$22,497,013. * Rural Houses Program (Programa de Viviendas Rurales): This program is oriented toward poor low- income families whose houses need to be improved or built. It is complemented with other actions to improve rural habitat. This program works in coordination with NGO of the communities involved. Totals invested in this area sum up to DR$11,894,729. As of July 1999 there were 8,226 units rebuilt, built or in the process. 166 + Program of New Houses (Programa de Viviendas Nuevas): This program includes two different program for families considered to be excluded by private sector investment: 1) Construction of new houses for low-income families (salaries below 4 minimum wages); 2) Construction of new houses for middle-income families (salaries between 4-7 minimum wages). The program for low-income families includes programs carried out by the Ministry of Public Works and the Coordinating and Monitoring Office of the Presidency, and that where transfer to this institution in January 1998. As a whole, there are 13,942 units built or in process of construction/formulation. Total investment on this program is of DR$663,623,161. * Special Programs (Programas Especiales): Under this category, INVI carries out five different programs: 1) Housing Subsidy Fund (Bonds for houses): This program was initiated in 1998 with the purpose of helping families to complete their savings to buy a house financed and constructed by the private sector. As of July 1999 they gave 680 bonds and 520 pre-qualification certificates, with 300 been monetized to acquire 300 houses. Investment in this program is DR$35,665,000. (Incluir bonos viviendas para m6dicos/noticia prensa de hoy). 2) Progressive housing solutions (Soluciones habitacionales progresivas). This program is intended for low-income families. At the present they are working in the area of Sabana Perdida, where they are constructing 134 houses. Investment in this program is DR$14,793,955. 3) Emergency Houses: This program started in 1998 to help victims of Hurricane Georges. This included not only activities to help families reconstruct their houses (low-income families) but also the construction of temporary houses (albergues) for families that lost their homes because of Georges. Under this program 19,852 units were rebuilt, and 12,000 temporary houses constructed. Also under this line of activities 300 houses were built for families affected by tropical storm Marcos, and 40 houses to families that lost their houses to a fire in Santo Domingo in March 1997. A new project for victims of a fire in Santo Domingo in 1998 and for people that live in dangerous zone near Gaspar Herndndez was started, that included the building of 160 houses. The total investment for these emergency programs is DR$505,819,250. 4) Programa Tripartito de Viviendas: This program started in 1998 and is a coordinated effort of INVI, Consejo Estatal del Azzicar and workers of the cooperative of the sugar mill of Porvenir to construct 35 houses in land given by Consejo Estatal del Azficar. Also, another project was started to build 535 new houses in land belonging to INVI and workers of sugar mills (INVI- DOREX); the construction of these houses are oriented to Dominican families that live abroad in order to promote their return to the country. 5) Legalization of Public Terrain: the Executive Power dictated a decree creating a "Titles Commission", to elaborate proposals and actions in favor of titling public land. 164. According to INVI, there is a new policy in this sector that includes giving the state a role as facilitator, and allowing the private sector to function as executor. This new policy looks for more coordination among all institutions that participate in the housing market, as well as giving direct demand subsidies, and increasing community's participation. As a part of this new policy, the institution is going through a serious of organizational changes in order to carry out all its programs more efficiently and effectively. They look forward to the creation of a Ministry of Housing and Urban Development and wish to see the State constructing only the poorest groups of the population and helping and regulating private activities in the market for the rest of the population. 167 G.2.iL Programa ComunidadDigna 165. This program is carried out by the National Office of Planning (ONAPLAN), a branch of the Technical Ministry of the Presidency. Under this program, considered by some as the "social arm" of the government, a series of programs to increase living conditions of the poorest sectors is being carried out. In the housing sector, most of the programs are being coordinated with INVI specifically in the urban improvement program, houses for people that live in vulnerable areas, subsidy fund for housing and program of rural houses (see above). (Me parece que ya esta inversi6n estd incluida en lo del INVI). G.2.ii Oficina Supervisora de Obras del Estado 166. This office carried was an important piece of the previous government. They have constructed around 7,200 new houses for middle-income families whose beneficiaries were assigned by presidential decree prior august 1996. The process of assignment of these beneficiaries is not very clear and it is assumed that it follows political criteria. 167. It is important to notice that this office was created by Decree in 1986 so the funds it receives are assigned directly by the Executive (excedentepresupuestario). 168. Also they have developed programs of construction of houses made of wood and blocks to help the poorest families. The number of houses built is 42,682 (in wood) and 2,033 (blocks). G.2.iv. Some Final Comments and Options for this Sector 169. The housing sector is a very important area. The government spends in this sector approximately 3 percent of public total expenditure. The condition of the existing houses particularly in the rural sector and the urban poor areas is very deficient. The existing policy of centralizing all the programs in one institution seems to be necessary in order to focus the housing policy of the government in favor of those that need the most. But there is also a need to eliminate political consideration and target the subsidies only for those most needed. 170. It seems that the government through INVI understands the importance of this sector and knows what institutional changes are needed to increase the efficient participation of the government in this area. The increasing investment in programs to improve quality of houses and reallocate people that live in vulnerable areas, strengthening the participation of the communities seems to be in the right direction. 171. But the need to target the resources to favor the poorest sector of the population does not seem to be very clearly understood. Also, there is the need to end the traditional policies of benefiting only those that are somehow politically related. Subsidies for middle-income families or particular groups should be eliminated (poner ejemplo de m6dicos que recibieron bono habitacional). Also there is the need to establish a mechanism for identifying beneficiaries for the housing subsidies. Since there does not exist a mechanism like that, the government must elaborate a system that could be used to identify beneficiaries for different social programs, not only housing. ONAPLAN or some agency at the Presidency level should be in charge of the creation of such a mechanism. 172. Another aspect that should be improved is the titling of the land. At the moment there is a program to title public land, where a commission was created to start developing proposals of action. But there is a need to improve the existing office of titling "Oficina de Catastro Nacional". At this time, this office has been characterized by high political influence and is very discretionary. Some small reforms are being carried out, but they are minimal. Still, there is a high cost in all the procedure for obtaining legal titling. 168 G.3. Water and Sanitation 173. There are a number of institutions that participate in the provision of water and sanitation services. Corporaci6n Dominicana de Agua y Alcantarillado (CAASD), Instituto Nacional de Agua Potable (INAPA) and Corporacidn de Agua y Alcantarillado de Santiago (CORASSAN) are the main institutions in charge of the provision of water and sewerage. They cover in general all urban and rural areas, but their coverage in particular that related to sewage in low-income urban and rural areas is rather limited. For those areas in particular the Ministry of Health, Pro-Comunidad and the Program Comunidad Digna provide the services. G.3.L Pro-Comunidad 174. This office is a dependency of the Administrative Ministry of the Presidency. It develops programs in poor communities to increase their living standards. The investment done by this office includes the rehabilitation of schools, construction of rural clinics, water systems and waste disposals. 175. From 1996-1999, the projects executed by this office (water systems and waste disposals) summed up to DR$47.0 million, out of a total of DR$343.8 million of the total resources invested by this office. In average more than 50 percent of the resources channeled by this office goes to the construction or rehabilitation of schools in poor rural areas. G.3.iL Final Comments 176. Even though the need to increase coverage in basic services, particularly in water and sanitation, the programs developed by Pro-Comunidad seems to have low coverage. The institutions actually involved in water supply (CAASD-CORASAAN and INAPA) have traditionally been engaged in huge projects to increase supply of water to cities in urban and rural areas. 177. There is a need to increase involvement of the communities, through NGOs, religious organizations and the like, to participate in programs in coordination with the public sector, to increase coverage in these services that critically affect the health status of the people living in poor areas. G.4. Health 178. In the Dominican Republic health services can be considered as one of the more deficient public services. The Ministry of Health and Social Assistance (SESPAS) is the main coordinator of all public actions related to the health sector. Along with SESPAS, the IDSS and the Social Institute of the Armed Forces (ISSFAPOL) are the main providers of the services. G.4.L SESPAS 179. There is a lack of coordination among all the participating institutions, SESPAS, IDSS, ISSFAPOL and private providers of health services. At the moment, a decentralization process is going on, aimed to give more institutional and financial independence to the regions or health districts. Even though the regulatory framework of such decentralization exists since 1998, nowadays the situation has not changed, with resources (financial, human and material) being assigned to each region at the central level, according to historical records. 180. Another problem relates to the distribution of the resources assigned to the Ministry. There is a high proportion of the resources oriented to tertiary attention, rather than to primary or secondary which have proven to be more efficient preventing and reducing diseases and mortality rates. 169 181. At the moment there is a new health code that seeks to increase coverage and efficiency of health services in the country. This system, that is part of the Social Security Reform that is being proposed to the Congress, plans to create a universal health insurance system with the combination of public and private providers. G.4.iL Presidency/PROMESE: Programs of Basic Medications 182. PROMESE is a program initiated in 1981, as part of the popular sales of food and medications by the Instituto de Estabilizaci6n de Precios (INESPRE). In 1993, the Program was changed to the Presidency of the Republic, depending on the Administrative Secretariat of the Presidency. The objective of this program is to give medications to the low income families of the population, at a very low price; in addition, the institution buys all the necessary materials such as usable materials and radioactive ones to be supplied to hospitals, health sub-centers, rural clinics and laboratories. 183. The boticas are installed in the hospitals and/or neighborhoods inside and outside the city, these last ones as required by the Junta de Vecinos. It must be pointed out that there is no other additional requirement for the installation of a botica, so they are not subjected to the same requirements that the private sector must fulfill in order to establish a drugstore. 184. In regards to human resources, the administration of the Program considers to have a qualified personnel .20 The process of selecting personnel is done in a discretionary way, by recommendations of the Presidency or by any other recommendations. If the selected personnel goes to work at the boticas, they are generally put through a training in a botica before been sent to the corresponding post to which he/she was assigned. Such training lasts a week to fifteen days in duration, depending on the selected person. The number of employees in the boticas populares changes according to the size of the same. Generally they require 3 employees but the bigger ones can have up to 6 employees. 185. At the beginning of 1998 a training course was taught, which included actualization of management of boticas populares. 186. The medications of the boticas are distributed directly by PROMESE. The hospitals send their own vehicles to look for the materials requested by the Program. The distribution of the medications to the rural centers are done through the Public Health Secretariat, to which the medications are delivered and it takes care of taking them to its final destiny. The hospitals receive their supplies monthly or every fifteen days, depending on the requests of their needs. The boticas, especially those located at the public hospitals, receive their supplies every week. 187. In relation to the sale through boticas populares, PROMESE seeks to establish efficient supervision mechanisms in order to see that the boticas only sell medications for personal use, avoiding that anyone could use these medications for commercial purposes. 188. In PROMESE they keep complete files of all the hospitals, with dispatch orders, purchase orders, etc. The same is recorded for laboratories with their corresponding invoices and all the other purchase documents. 189. Similar procedures are used in the boticas to keep control of the medications that are sold, in order to supervise the boticas so all the documents have a correspondence with the medications sent and those sold. 20 Fundaci6n Economiay Desarrollo, 1998. 170 190. In addition, all the records and required documents are kept to allow adequate accountable and financial information. 191. In relation to the costs of the boticas, the cost of purchasing medications has been estimated to be between DR$5.00 and DR$10 millions per month. PROMESE does not cover the cost of the buildings of the boticas, specially those in neighborhoods are covered by their respectivejunta de vecinos. 192. The possibility of selling medications at a low price is directly related to the fact that the Program sells generic medications, with no brand whatsoever. To this it should be added the fact that the purchases are done in a big scale, since PROMESE buys not only for the boticas but for the hospitals as well. Nonetheless, it has not been possible to define which of these two aspects have a higher incidence at the final sale price of the medications. 193. It must be pointed out that since this Program has universal coverage, the lack of controls, in general for its execution, could be an indicator of the lack of efficiency with which these are handled. Of special interest is the handling of inventories of the company, since in different occasions there has been public accusations of the problems related to the loss of medications. 171